Customer service a key differentiator for businesses: Report

Customer service is increasingly playing an important role in business performance, according to the findings of annual research by Zendesk.

According to the global Zendesk Customer Experience (CX) Trends Report 2022, 94 per cent of Indian consumers report making purchase decisions based on the quality of customer service that they receive. Further, a majority of Indian businesses surveyed (88 per cent) agreed that there is a direct link between customer service and business performance.

This is higher compared to other counterparts in Korea (57.7 per cent), Japan (59 per cent), Singapore (66 per cent) and Australia (76 per cent).

However, 84 per cent of Indian consumers opined that customer service is often an afterthought for businesses, indicating a gap between consumer expectation and company actions.

The expectations of Indian customers in terms of customer service has grown over the past year with 88 per cent of Indian consumers stating that their customer service standards have increased over the last 12 months. It is also one of the determining factors for customer retention and loyalty, as 85 per cent of Indian customers said that they were willing to switch brands after one bad experience. Around 61 per cent of Indian businesses agreed that customer service has an impact on retention.

Additionally, 65 per cent of Indian companies expect funding for their customer service teams to rise by 25 per cent in the next 12 months. Apart from this, 73 per cent of Indian companies reported having a three-year strategic plan for customer service.

“Businesses cannot afford to take a transactional approach to their relationships with their customers. Customer service is now a key differentiator, but this year’s report reveals some gaps exist between expectation and delivery,” said Adrian McDermott, Chief Technology Officer, Zendesk.

 “Customers are noticing this gap and voting with their business - and that’s perhaps the clearest signal to businesses that change needs to happen, and fast,” McDermot added.

 “Businesses need an institution-wide shift where investments into tools and processes that enhance CX become a priority. The insights are clear on the competitive advantage and scalability that Indian businesses can achieve through these investments,” said Vasudeva Rao Munnaluri, Regional Vice President India & SAARC, Zendesk.

Key Trends

According to the report, 85 per cent of businesses in India estimate that customer service will have a positive impact on business growth. 

“The opportunity is not simply to deliver a single solution-based interaction with the consumer, but to use that point of engagement as an opportunity to deepen the relationship,” the report stated.

As customer engagement grew 14 per cent globally from the previous year, 69 per cent of Indian companies stated that it provided more opportunities for cross-selling.

“This cuts both ways though, and the insights reveal that customer expectations can drive or stifle growth plans. As consumers spend more online, a majority say that their customer service expectations have increased in the past year,” the report said. 

“Channels play a big part in meeting these increased expectations and particularly, being where the customer is. However, almost half the companies surveyed did not have a strategic plan for customer service over the immediate to medium term,” it further added.

From a customer perspective, 94 per cent of Indian consumers said that a positive customer service experience makes them more likely to make another purchase. Further, a whopping 99 per cent of consumers were willing to spend more money on businesses offering personalised and streamlined experiences. 98 per cent of Indian consumers were willing to spend more to buy from companies that offered them the chance to find the answers they need themselves, the report added.

Further, as 46 per cent of Indian companies looks at CX as a revenue-generating engine for growth, 28 per cent view CX as a cost centre. With customer expectations increasing, there is also increased pressure on agents, who act as the front line. As per the report, 90 per cent of Indian organisations agree that customer service agents are essential to retaining customers.

“When it comes to resolving issues, almost half the consumers surveyed worldwide are looking for agents who are helpful and empathetic. And customers will parlay this goodwill in a positive experience to being open to recommendations from service agents. Many businesses, though, have yet to recalibrate their view of customer service as a cost center,” the report said.

About half of consumers surveys prioritised helpful and empathetic agents while resolving a customer service issue. From an agent perspective, 59.7 per cent of agents in India said that they were “extremely satisfied” with their workloads.

Agent skilling 

“Agent empowerment is a clear focus area for 2022, as agent burnout continues to be a challenge,” it further said. 

According to the report, 49 per cent of agents in India were extremely satisfied with the quality of training they receive compared to agents in Australia (10 per cent), Japan (2.5 per cent), Singapore (12 per cent) and Korea (12.2 per cent). This is on top of the fact that 89 per cent of customers in India, 50 per cent in Australia, 46 per cent in Japan, 69 per cent in Singapore and 37 per cent in Korea agreed that businesses need to improve agent training. Businesses need to invest in agent training including “better performance metrics, clear advancement opportunities and, fundamentally, more respect.

48 per cent of business leaders in India expect an increase in the amount of training offered to agents by a great extent. Further, 69 per cent of Indian businesses expect to focus on training their agents in providing service across multiple channels while 68 per cent of Indian companies plan to develop flexible work team to resolve specialised problems.

Closing the gap

“Eight in ten Indian businesses view customer service as a critical business priority and only 29.5 per cent report that it’s not owned by the C-suite,” the report said.

Businesses in India fared better in identifying customer service as a board-level priority compared to companies in Australia (44.9 per cent), Japan (55.3 per cent), Singapore (40.3 per cent) and Korea (54.9 per cent), where it is not owned by the C-suite. 

“While the insights clearly indicate a business case for investments in customer experience, this isn’t necessarily being followed through with executive sponsorship or the right tools or programs, such as training for agents,” as per the report.

There is also a need for improved customer service metrics. 60 per cent of business leaders said that ROI has been positive over the past 12 months. However, only 23 per cent strongly agree that customer service spending has kept pace with company growth.

Further, organisations also need to leverage technologies such as artificial intelligence. As per the survey, 90 per cent of Indian customers expect AI to save time when contacting a company while 88 per cent expect the technology to keep them from having to repeat themselves after contacting a company for support. 87 per cent of Indian customers expect a majority of customer service interactions to be automated as well as increase the quality of service.

“This means that businesses looking to drive and sustain growth — both now and in the future — need to focus on two emerging customer service capabilities: artificial intelligence (AI) and automation, and conversational customer service,” it said. 

56 per cent of Indian businesses plan to speed up adoption of AI in customer service, while 43 per cent have already implemented conversational customer service and 38 per cent plan to implement it in the future.

 “The business case for customer service is clearer than ever and getting buy-in from the top is a critical first step. Getting this engagement relies on evolving the key metrics - look beyond CSAT and identify the broader business impact that can tell a compelling story,” McDermott said. 

“This year’s findings bring into sharp focus the need for there to be a more concerted effort across the organization - including better integration of systems and a regular review of metrics,” McDermott added.

The report is based on inputs from customers, agents, customer service leaders, and business leaders from across 21 countries. Data was also gathered from more than 97,500 Zendesk customers who participated in the company’s Benchmark program. Over 3,511 consumers and 4,670 customer service leaders, agents and technology buyers from 21 countries and organisations ranging from small business to enterprise were surveyed during July and August 2021.