The human factor in service design - McKinsey Quarterly - Operations - Performance | Customer Care training |

Focus on the human side of customer service to make it psychologically savvy, economically sound, and easier to scale.

Poor customer service isn’t a headache just for
consumers; it’s a problem that vexes senior managers too. Balancing the
trade-offs between the cost of services and the customer experience benefits
they provide is difficult. Ensuring that frontline workers can efficiently and
consistently execute service offerings across a far-flung organization is harder
still. Along the way, many companies lose sight of what makes human beings
tick—for instance, by overlooking well-known principles of behavioral science
when delivering services—and thus unwittingly predispose customers to

At the same time, the customer service landscape is changing as social media
and new mobile phone technologies give companies unprecedented access to data on
customer interactions, while the technologies are changing the nature of the
interactions themselves—for example, by amplifying the speed and impact of
customer complaints.

Three questions

Against this backdrop, some organizations are making strides in the design
and delivery of services. By focusing more thoughtfully on the human side of
customer service, these companies are lowering costs by 10 percent or more while
improving customer satisfaction scores by up to 30 percent. In this article,
we’ll look at three such companies—a provider of cable-TV and Internet services,
a technology company serving small and midsize businesses, and a car rental
company. From their experiences, we’ve distilled three interrelated questions
that CEOs and other senior executives should ask themselves before they
introduce new services or conduct a reality check on the health of existing
ones. Taken together, the questions can help spur productive conversations among
top-team members, raising the odds that a company’s services will be both
efficient and effective.


1. How human is our service?


It’s no secret that the quality of a company’s service interactions matters
greatly in creating a positive experience with customers. Yet few companies
focus on how customers form opinions about those interactions. By applying well
known principles of psychology and behavioral science to service designs and
working harder to understand what really motivates—and irritates—customers,
companies can begin improving the experience quickly and at low cost.1

Consider the experience of the cable-TV provider that looked to behavioral
science to help improve its widespread reputation for bad service. The company
started by examining the characteristics of its most important customer
interactions—phone calls initiating new service—and quickly identified several
pain points. The calls, for example, typically contained off-putting directives
from agents, as well as “dead” periods when customers felt that their time was
wasted. Worse, the calls often ended with awkward billing discussions and legal

The company completely redesigned the calls. First, credit verifications
occurred earlier, and in the background, while agents helped customers set up
their accounts. This approach eliminated awkward silences, as well as the
frustrations that arose at the end of calls if customers were found not to be

This new approach also allowed customers to feel more in control, by adding
simple choices to the conversation: “How do you want your billing to be set up?”
for example, or “How would you like your installation to be conducted?” By
reframing as choices what had previously been directives, the company found that
consumers began rating the interactions more positively.

Agents were also coached to end the calls on a high note—another human
preference that behavioral scientists have identified—by surprising customers
with a coupon for a free product. Replacing what had been a stilted and highly
scripted ending (“a lot of fine print and disclosures,” admitted one sales
agent) with a bonus offer helped customers to view the calls more positively,
introduced them to the company’s product catalog, and ultimately drove higher

Similarly, behavioral science indicates that customers dislike unexpected
changes and are more satisfied when they can stick to their habits during
service interactions. A B2B sales group at a technology company took this
tendency into account when it significantly redesigned its sales processes for
small-business customers. The company augmented its traditional sales blitz
approach—multiple reps targeted many clients at once, common in B2B settings—by
assigning a specific “service champion” to each client. A consistent point of
contact improved customer satisfaction and helped free up the sales reps’ time
for additional selling.2

Finally, by thinking harder about what makes customers tick, companies can
turn service weaknesses into strengths and even spot possible new service
offerings. A rental-car company, for example, recognized that its value-segment
customers became more anxious than its premium customers did at the prospect of
finding assigned cars in crowded lots. (The reason, in large part, was that
value-segment customers traveled infrequently and were less familiar with the
rental process than the premium customers were.) This observation led the
company to introduce a successful—and, for travelers, less stressful—“pick any
car” option.


2. How economic is our service?


The service offering that the rental-car company implemented was grounded in
a clear economic rationale. The pick-any-car option was not only more efficient
to operate than the old system but also created valuable revenue opportunities:
the economy- and luxury-car choices were parked next to each other, so
value-segment travelers with families were frequently tempted to splurge on
larger, more expensive vehicles. Many executives miss opportunities such as
these when they overlook the full economic impact of customer service.

In practice, of course, trade-offs among service levels, revenues, and costs
are complex. Mastering the challenge requires developing an integrated view of
the economics across a range of customer touch points. Often, tools such as
breakpoint analysis, which can help determine customers’ actual sensitivity to
service changes, are a good place to start.

The rental-car company, for example, conducted such an exercise and learned
that its value-segment customers were more amenable to driving used cars than it
had previously assumed. Received wisdom in the industry held that consumers
balked when vehicles reached 30,000 or so odometer miles. Yet a quantitative and
qualitative analysis showed that customers would accept cars with higher mileage
if the costs were relatively low, the cars were clean, and the company offered a
well-crafted maintenance and reliability guarantee. Determining the breakpoints
opened the company up to a whole range of higher-mileage vehicles it hadn’t
considered before and thus represented a significant potential for savings.

Similarly, the technology company’s sales group found that wide variations in
service levels were acceptable when it returned its customers’ telephone
inquiries. Executives knew, of course, that calls about the accuracy of orders
required an immediate response but hadn’t realized that the company’s B2B
customers were willing to wait up to a week for answers to other types of
inquiries. Getting a handle on the different breakpoints allowed the service
champions to work efficiently while still focusing their immediate attention on
service hot spots.