The Frictionless Organization

Deliver Great Customer Experiences with Less Effort

Bill Price, David Jaffe

• Publisher: Berrett-Koehler Publishers
• Year: 2022
• ISBN:
  9781523000166
• Edition: 1
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Learn how frictionless organizations cut costs, grow revenue, and create loyal fans by creating products and services that work so well, their customers never have to contact them for the wrong reasons. This book will help any customer-facing organization deliver better customer experiences, save money, and increase revenue. Veteran customer service experts Bill Price and David Jaffe, coauthors of the bestseller The Best Service Is No Service, explain how organizations can design products, sales, and support so that customer effort is reduced or, better still, removed. This simplicity for the customer is what Price and Jaffe call frictionless. The book defines a straightforward methodology, drawing on more than thirty practical examples from leading companies across four continents. The approach provides a radically different way for the whole business to focus on the customer experience. It explains how any organization can look at all customer interactions as potential opportunities for improvement and question whether they are helpful or represent symptoms of friction. Lower friction innovators are disrupting established businesses in every industry. This detailed guide shows how any business-from start-ups to major multinational corporations-can remove friction. Being frictionless has become a strategic necessity, and now this strategy is available to any organization.

UNDERSTAND 1

Any fool can know. The point is to understand.

—Albert Einstein

WHAT IS “UNDERSTAND” AND WHY IS IT IMPORTANT?

Most organizations have a long way to go before they are frictionless. An easy way to tell if you are close to eliminating friction is to look at how many people are in the customer service department. Let’s compare the percentages of customer care staff in four different businesses:

■ An online service provider has 44% of its staff in customer service.

■ A telecommunications company has 37% of its staff in customer care.

■ An accounting software business has 21% in customer support.

■ An insurance business has 18% in customer care and 9% in claims support.

The reason you can be sure these organizations are far from frictionless is that their busy customer contact teams are dealing with frustrations and problems—not sales opportunities. Even though these businesses now offer more contact choices, including options like chat and messaging, customers are still getting stuck and needing help. Contacts typically start with expressions like, “Why can’t I … ?” “I don’t understand” or “How does this work?” It’s common to have 60% to 70% of contacts represent these forms of dissatisfaction. The ISO 10002-2018 standard states that a complaint is an “expression of dissatisfaction made to an organization,”¹ so in many ways, the contact centers in most organizations are handling different forms of complaints. The more of these dissatisfaction contacts an organization is handling, the further it is from being frictionless and the larger the opportunity to improve customer retention and reduce costs.

Given the size of these customer service workforces and the associated costs, you would think that that the ability to Understand and then to reduce contact drivers would be the top priority. However, even the measurement of contacts is not well understood within businesses. Ask most boards and executive teams if problem contacts are increasing, and few would be able to answer. Very few organizations collect, and virtually none of them publish, their contact rates against an appropriate measure of business growth. Very few annual reports feature commentary about the “lower rates of contact” from customers, and it rarely gets discussed in analyst briefings. There are exceptions in companies closer to being frictionless, however. Take Amazon, for example, whose founder and CEO, Jeff Bezos, declared back in 2007,

Execution focus is a big factor [for us], and you can see it in our financial metrics over the past ten years. It’s very obvious when, for instance, we look at the number of customer contacts per unit sold. Our customers don’t contact us unless something’s wrong, so we want that number to move down—and it has gone down every year for 12 years.²

Amazon has long reported and managed contacts per unit (CPU) shipped, recognizing that the larger the order (meaning the greater number of items, or units, in the order), the greater the risk of something going wrong. They still measure CPU today, but few organizations have followed suit. Tracking rates of contact has become harder to do as the number of contact channels have increased. Most organizations rarely report their call rates let alone their combined rate of chats, calls, emails, and messages.

Instead of mining these contacts to help drive improvements, organizations have focused on finding less expensive support methods. Many have moved contact operations to cheaper locations (for example, offshore to countries with lower labor costs) or have sought forms of automation regardless of the impact on the customer (as we’ll explore in chapter 4, “Digitize”). Automation and digitization, when executed well, can be part of a frictionless strategy, but to know what to automate and what to digitize and how to do it well, you need a good understanding of why customers are making contact and what they are looking for. The Understand strategy is therefore an essential step in driving subsequent strategies.

Understanding the rate of and reasons for contacts is the first step to becoming frictionless. The rate of contact shows the size of the prize and the extent of the imperfections. The reasons behind customer contacts show what problems need to be analyzed and fixed. It’s also great customer research, since customers are taking the time and effort to call, write, or text to show something isn’t working. Every contact is telling a valuable story. Consider, for example, a contact center with 100 agents having approximately 31,200 conversations a week³ with customers about what they do or don’t like about the company’s products and services. What a gold mine of potential insight! Imagine how much it would cost to engage a market research firm to interview 31,200 customers.

The recent business trend is to ask customers, “How well did we handle that?” in surveys that typically get 1% to 10% response rates. But the more fundamental question of Understand is “Why did the customer have to contact us?” There seems more to learn in understanding the reasons behind the customer contact, and looking at this data doesn’t put the customer to extra effort.

There are four levels to the Understand method.

Calculate and Track How Often Customers Contact Us across All Channels

This means understanding the rate of contact—and not just the volume of contact—and how that rate is trending. While the contact volume can fall when business is trending down or during off-peak seasons or grow when business is rapidly expanding, the contact rate looks at the extent of customer contact relative to the growth or decline of an organization’s customer base. Using the Understand strategy will show that most contacts are not valuable and that the goal should, therefore, be to reduce contact rates over time. Tracking the rate of contact answers two critical customer experience questions: (1) Are we getting easier to deal with or harder? and (2) Are we nearing a frictionless state?

Capture the Reasons for Customer Contacts and Associated Costs

To make sense of contact volume and trends, organizations need to understand what drove customers to make these contacts. Then they can start to analyze the root causes of the contacts and work out what related issues to tackle. This decision-making is easier when the total cost of each contact reason is understood, starting with the handling time and labor costs of assisted support and the cost of other actions or make-goods that happen (e.g., problem research time, refunds or replacements, sending a repair crew).

Determine Repeat Contact Rates and Causes by Channel

Repeat contacts are the greatest source of frustration for customers, since they represent multiple amounts of effort. Making a second or third contact about the same subject is more frustrating, especially if the first contact was a complaint. Repeat contacts can span channels, as well, so if a customer attempts to use a chatbot that fails; tries to check the app, which fails too; and finally ends up calling the contact center, then that’s already two repeat contacts. Understanding these repeats helps an organization get a grip on the key pain points for customers and adds disproportionately more cost than an initial contact.

Assess the Customer Impact of Contacts

Contacts affect revenue and customer relationships, and they cost organizations a lot of money. This “failure demand” may well cause customers to leave or do less business with an organization. The Understand method, therefore, looks at the relationship of contacts to other key customer behaviors, like leaving, spending, and rating the organization. It shows the complete impacts of the contacts.

Understanding customer interactions is a necessary first step toward becoming frictionless because it enables a systematic and fact-based approach for improvement. Put more simply, the ability to Understand allows an organization to assess which strategic actions to take. (Chapter 8, “Learn,” takes this further by describing how organizations can apply the Understand method continuously). The business world is littered with investments in self-service, digitization, and simplification that didn’t deliver the business case that was hoped for. For example, recently a company accepted a business case claiming that a chatbot could automate 40% of calls, but it was based on a vague analysis of the reasons for calls. They then obtained only half of this result, or a 20% success rate, because they didn’t understand the reasons for contact well enough.

As mentioned, it is getting more complex to apply Understand since customers can express dissatisfaction in multiple channels. The good news, however, is that the latest analytical and AI (artificial intelligence) technologies can help automate this analysis and provide rich, continuous, all-embracing insights. Executed correctly, the Understand actions help an organization to do the following:

■ Expose the size of the opportunity.

■ Quantify the root causes and opportunities.

■ Analyze the strategies needed to exploit these opportunities.

■ Identify the areas of the organization or the partners that need to be involved.

■ Determine why customers are buying less or are leaving.

■ Track the impact of investments and improvements.

■ Cut the costs of low-sample-size surveys and research.

The following stories show how organizations have been able to achieve these results.

GOOD STORIES

The 30 Reasons That Matter

Amazon once had more than 300 customer contact reasons for emails and 60 for phone calls. The wording of the reasons given for phone calls was different from that of emails, and the reasons for each type were reported in separate tables. Worse, the company added reasons whenever a new product category was launched or whenever an executive requested that a specific issue be tracked. Amazon thought they understood what was driving their customers to contact them for help, but in reality, the combined 360 reasons didn’t really add insight or drive change. Upon closer inspection, it turned out that there were really only 30 unique reasons for Amazon customers to contact the company, including “Where’s my stuff?” The recognition that it was possible for frontline staff to classify contacts into these magic 30 reasons turned out to be a gamechanger. The company trained its customer service agents to capture these 30 reasons using a two-digit identifier, which all agents quickly memorized. As the reasons became familiar to the agents, they also became reliable in the diagnosis. The number 30 turned out to be important. It wasn’t so large that each reason accounted for less than 1% of contacts and therefore appeared not worth fixing. Nor was it such an aggregated grouping that the underlying customer issues were not clear. Each of the 30 reasons also had a clear customer statement attached t...