Is Differentiated Customer Service Worthwhile? Part Two – The Case Against

Is Differentiated Customer Service Worthwhile? Part Two – The Case Against

In the first article of this series, we discussed the rationale behind providing differentiating service to customers. This time we consider the arguments to treat all customers the same.

Many organisations have a “one size fits all” approach to customer service. This is an understandable position – it’s simple, it seems ‘fair’ to everyone, and it’s what customers are used to anyway. Imagine how the customer would feel if they discover that they have intentionally been offered a slower response time or less experienced staff than other customers.

So what are the main reasons for giving consistent, homogeneous service?:

  1. Simplified operations. It isn’t easy even to deliver the same customer experience across all channels, time after time. Adding the additional complexity of offering multiple experiences means ensuring staff, systems and processes can support those multiple experiences, and therefore impacts costs and risks that expectations may not be met. Training escalates, more experienced staff are required, and additional overheads in coordination occur in both front and back office.
  2. Brand positioning and revenue uplift. Concentrating on and consistently delivering a single experience or service promise supports a company’s brand positioning and reputation. Over time customers will get a clear picture of what the brand represents and form a rational and emotional bond with you. This leads to customers actively recommending you to their family and friends, and leads to the known and proven benefits of customer loyalty.
  3. Employee advocacy. A consistent service promise is easy for staff to understand and demonstrates to them that the organisation has integrity, delivering the best service to customers that it can. Employee advocacy is proven to drive customer advocacy, since the passion and commitment shown by employee advocates is felt by customers.
  4. Cost savings. Training frontline and back office staff to handle multiple experiences will add to training costs and systems upgrades or replacements to support the differentiation could be costly. Staff must be trained to handle either experience or efficiency may be compromised as additional resources will be required to serve the same number of customers. This scenario would also increase costs.

If all these benefits are realised without differentiating service, then why would we differentiate? Airlines for example very heavily differentiate service, but then the relative spend of frequent international business travellers compared with occasional interstate flyers varys by perhaps 100:1, and when the level of spend varies so widely, companies really have to differentiate service to align with the respective customer needs and expectations. By contrast, retail consumer banks typically offer fairly ubiquitous service to most customers with variations for a small percentage in private banking.

There is relatively little variance in customer value of perhaps 10:1 (e.g. most new mortgages are generally in a range $250k to $2.5m) for the majority of customers, so there has, in the past anyway, been a less pressing need to outweigh points 1 to 4 above. Telco customer service is also fairly ubiquitous, although in this case is differentiated in another way, to take account of the vast number of mobile or broadband plans forced by the competitive and market-led nature of the industry.

Summary: If an organisation has a very wide range of customer spend, or multiple products or services specific to a segment or group, then differentiated service is appropriate. For all other organisations though, surely a consistent service to all customers aligned with the brand positioning is the most advantageous?

Well, maybe. In the next article we will discuss what experiences require differentiation of service, but in the meantime we look forward to your thoughts.

David

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