Wednesday, October 19, 2011

What Contact Centers Can Learn From Behavioral Science

By Luis Gonzalez

Busy contact center managers often overlook their customers’ feelings. They tend to focus on easily quantifiable metrics such as abandonment rates, service levels, staffing levels, etc. While these metrics are important to the bottom line, there is also tremendous value in focusing on the consumers’ experience. This is where behavioral science comes into the picture. Businesses can leverage psychology to improve customer service in contact centers.

In 2001, Richard B. Chase and Sriram Dasu published the Harvard Business Review article “Want to Perfect Your Company’s Service? Use Behavioral Science”. They detailed a study that examined encounters between customers and service providers to understand how these experiences make customers feel. It was the first look into how behavioral science principle can advise customer service operations.

In 2010, John DeVine and Keith Gilson built upon this research with the McKinsey Quarterly article, “Using behavioral science to improve the customer experience”. These articles provide a roadmap for contact center professionals to improve customer satisfaction at low costs.

Perception is Reality

Applying behavioral science to customer service means remembering the old adage that perception equals reality. In any service encounter – from simple request for information, to strategic contact center outsourcing partnership – what really matters is how the customer feels during the encounter, since those feelings will shape their perception of your brand. Contrary to popular belief, these perceptions are principally emotional. Behavioral science can use this insight to help managers understand how customers respond to experiences, and how they rationalize experiences after the fact.

“When dealing with people, remember you are not dealing with creatures of logic, but with creatures of emotion.” – Dale Carnegie.

Many behavioral scientists research how people process time. Though much remains a mystery there have been breakthroughs. As chronicled in “Flow: The Psychology of Optimal Experience,” when people are mentally engaged in a task, they lose track of time. Another study found that segmentation makes time feel slower. For example, six 30-seconds commercials will feel longer than three one-minute commercials.

Research also confirms that people perceive time in terms of reference point; therefore, unless an activity is much longer or shorter than expected, a people do not notice its duration.

Psychologists generally agree that people remember only a few significant moments of an experience.  They remember those moments clearly and overlook the rest. Behavioral scientists have also observed that people desperately want things to make sense.

Humans have an innate desire for explanations, and are willing to make them up if necessary. Psychologists further observe that people attribute a deviation from the room as the reason for an unexpected outcome. Additionally, people are more likely to attribute blame or credit to individuals than systems, since humans prefer to put a face on a problem. All these discoveries have the potential to impact the customer service industry.

Behavioral Science: Application to Contact Centers.

The seminal 2001 Harvard Business Review article laid out principles for managers to consider when designing customer service programs: segment the pleasure, combine the pain, give people rituals and stick to them, finish strong, get the bad experiences out of the way early, and build commitment through choice.

In 2010, McKinsey Quarterly took a deep dive into the implications of these principles. In their aforementioned article, DeVine and Gilson chronicled a leading North American health insurer’s experience testing the return on investment of creating a customer service environment based on behavioral science. This inspired Inktel Direct to conduct a study examining the effects of implementing behavioral science in the contact center environment.

Principle 1: Segment Pleasure, Combine Pain

The number and sequence of painful and pleasurable incidents affects people’s perception of an experience.

Winning $100 is typically not as satisfying as winning $50 twice. Conversely, someone who loses $100 is usually less distraught than someone who loses $50 twice. Despite that the amount of money is equal; an experience’s emotional impact is magnified by the number of incidents. The lesson learned from gamblers is that, to maximize customer satisfaction, we should isolate unpleasant experiences while separating pleasure ones, where possible.

Despite the remarkable implications of this behavior, most businesses have not taken advantage of this knowledge. The Department of Motor Vehicles, for example, usually has people wait in multiple lines. This compounds frustration and contributes to the negative perception of the DMV’s customer service. In the insurance industry, and the various industries that Inktel Direct services, customer care teams identified the most uncomfortable parts of a conversation and moved them to the beginning of the call. Teams also identified conversations that customers enjoyed, such as discount opportunities, and touched on them throughout the call. Both studies saw an improvement in customer satisfaction.

Principle 2: Give People Rituals and Stick to Them

People have fixed habits, and typically experience discomfort when behaving differently. When creating customer service experiences, it is important to understand this distinction: Any part of the service process that causes people to break a ritual will decrease satisfaction. Changing call scripts or implementing new interactive calls can often cause discomfort, despite the intent to improve the customer experience.

Principle 3: Finish Strong

We have all heard about the power of a first impression, and it is certainly important in customer service. However, while a terrible start can ruin a call, it is better to start weak and end strong than the other way around. People judge interactions by whether they progress or deteriorate.

Principle 4: Get Bad Experiences Out of the Way Early

In customer service interactions, there will inevitably be negative experiences. It is important for contact center to develop a system that quickly identifies and addresses these issues. According to behavioral psychology, people prefer to have bad experiences early on, so that they can stop worrying and look forward to desired outcomes. When people experience displeasure, the feeling is mitigated if it occurred at the beginning of an interaction.

Principle 5: Build Commitment through Choice

Empowerment is a buzz word around businesses, and for good reason. Empowered employees are generally more motivated, productive and satisfied. While most companies understand the importance of empowering employees, contact centers generally overlook the benefits of empowering customers. People’s level of happiness is correlated with the level of control they feel.

The aforementioned insurance company gave customers a choice on there critical elements: the type of treatment plans, which facilities doctors they preferred, and the follow-up schedule. Inktel Direct identified specific choice to give customers, relative to the program. Both cases saw a higher rate of customer satisfaction with a minimal cost increase.

Contact Center Takeaways

Contact center have the ability to improve customer satisfaction by using the knowledge accumulated by behavioral science. These changes have a low monetary barrier, but require knowledge and a conscious decision to move forward. The increased customer satisfaction, as a result of utilizing these principles, can increase brand equity, customer loyalty and result in more sales. As a bonus, greater customer satisfaction benefits contact center employees. When your customer service representatives are empowered with tools and methods to better improve interactions with customers, employee satisfaction and motivation increases, which can revolutionize your workplace.

Luis Gonzalez is executive vice president of operations for contact center outsourcer Inktel Direct