How smart, digital service innovation is shaping the future of business

Prioritising the public should drive product innovation

Building truly successful long-term relationships should entail placing a similar emphasis on imagination and innovation towards customer service as is placed on the products they’re buying. For businesses seeking a competitive advantage in the digital age, it’s not uncommon to see a ferocious focus on innovation within products, and yet little energy and resource left over for the customer service experience.

Service innovation goes beyond the retail world; local authorities must serve citizens who are increasingly used to a 24/7 ‘always on’ lifestyle, and who demand the same response from their council as they would from the likes of Amazon. Health and emergency services need to work with increasingly stretched resources in ways that are better, faster and more cost-efficient.

Smart, technology-driven service innovation will shape the future of how a vast range of organisations build loyalty, streamline their back office, deliver services and reinvent their business models. It’s a key part of the digital transformation that all businesses need to evolve and prosper – and it’s one being driven ahead by clever applications, unexpected thinking, and new twists on old solutions.

What sets the industry leaders apart?

This drive to reinvent the customer’s experience is increasingly what separates the top performers in customer satisfaction from the rest of the field, and there can be tangibly positive impacts on the businesses themselves.

For example, in January the UK’s Institute of Customer Service released its Customer Service Index (UKCSI), a national measure of customer satisfaction. It showed that organisations consistently hitting a UKCSI score at least one point higher than sector average are achieving turnover growth averaging 9.1%. Those with a UKCSI one point lower than average… just 0.4%.

An opportunity to build loyalty

At a time when market researchers Forrester declare that UK companies are losing £11bn a year due to poor customer service (their American counterparts are losing $62bn a year), there are clearly opportunities for organisations to build loyalty and revenue through service innovation.

As Forrester principal analyst Kate Leggett says, good service correlates directly with “decreased customer churn, increased customer lifetime value and increased advocacy, which ultimately impacts revenue.”

“Good service correlates directly with decreased customer churn, increased customer lifetime value and increased advocacy, which ultimately impacts revenue.”

— Kate Leggett, Forrester principal analyst

In the public sector, local authorities must square the circle of ever-tighter budgets with a citizenry that sees no reason their Housing Benefit should not be interpreted with as much ease as their Amazon order.

As a result, councils and social housing groups have innovated by creating special citizen portals, designing their own apps, and even building their own chatbots to handle common enquiries.

Designing new service ideas

Amongst the organisations helping both the private and public sectors achieve service innovation is Capita. Learnings from its extensive customer service footprint are helping develop new technology and platforms. It employs more than 20,000 contact centre agents and provides outsourced customer service to organisations ranging from British Gas to Essex County Council.

“We can tell that it’s not just about the purchased product any more,” said Mike Barnard, Executive Director of Capita’s Private Sector Division. “It’s more and more important to focus on innovation in customer service around that product. We need to understand what customers want, now and in the future, and work with organisations to meet those needs, whether through use of data, how people interact with different channels, or changing processes.”

Projects have included a visual Interactive Voice Response system for mobile operator O2, which was designed to help customers unfamiliar with apps. It uses simple texted prompts on their phone’s screen to guide them through self-service options – like a virtual application – whilst they’re on a call to an advisor, with whom they can choose to speak at any time.

Meanwhile, 999eye was developed for the West Midlands Fire & Rescue Service. 999 callers can quickly and securely stream live footage of incidents directly to emergency control rooms, enabling fire services to assess the scenario and dispatch resources to suit.

Delivering the digital message

How are organisations adapting to the heightened service expectations of their customers? Anne Marie Forsyth, Chief Executive of the CCA (the Customer Contact Association) says the crossover between digital transformation and service innovation can be an area that confounds some company boards. “The sort of questions we hear a lot from our members are things like: ‘what is everybody else doing about artificial intelligence, robots and automation?’ I think that can be a sign of what boards struggle with. They’re just not sufficiently digitally aware of the issues involved. I’d say that as a CEO, your job is to find better ways to do business, and to do that you have to truly understand how customer service will help you meet your strategic aims.”

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Making customers’ lives easier

So what is the ultimate aim of service innovation? A good measure might be by how it reduces the effort customers have to put in to maintain a relationship. Fast moving, ‘service-aware’ digital firms understand this and can leverage the advantage they have against businesses such as high street banks, which can struggle with legacy technologies.

Those companies which have invested in technology and service innovation, and who have up-to-date platforms that don’t make the customer work too hard, seem set to be the ones who win the competition to recruit and retain customers.

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