Technology innovation has created new customer service channels. This insight takes a deeper look at how the customer service experience has evolved from high-touch person-to-person connection to automated solutions. Find out what the six types of customer service brands should learn and master today.
Table of Content
Introduction – What is Customer Service?
Customer service is the process that allows companies to manage customer needs and expectations before, during, and after produce or service purchases. Each brand designs, implements, and maintains its own set of customer service standards that best fit its core values. Well-run customer service can increase loyalty, generate additional revenue, and reduce customer churn.
Three Customer Service Myths
- Myth: Customer service is only about contact center interactions.
Fact: There are actually many types (also called channels) of services available for brands to design and operate with their customers. More types allow brands to reach and interact with a wider set of demographics. However, they will require more resources to maintain a consistent feel across all types (find out more in the next section). - Myth: “The customer is always right”.
Fact: The popular phrase was popularized by American retail pioneers from the turn of the 19th century. However, it was initially made famous by Swiss hotelier, César Ritz of the Ritz Hotel in Paris and Carlton in London, who coined the slogan “Le client n’a jamais tort” as early as the 1890s. The literal translation of the slogan is “the customer is never wrong” which is slightly different than the form we use today.
During a customer disruption event, the goal is to reduce tension through active listening and understanding the issue, manage and reset expectations, and negotiate a satisfactory closure that benefits all parties involved.
Jumping to conclusion that the customer is always right could set the wrong expectation for all future interactions which would further impact the company.
Perhaps the phrase should be changed to, “Let’s make it right with the customer”. - Myth: Customer service is a marketing department function.
Fact: Customer service design and execution impact all major departments including information technology, finance, marketing, and operations. As such, all departments should be involved when assessing, implementing, or improving different components of customer service. In practice, all customer interaction data and information should be collected and communicated with all relevant departments. This will aid them in making the right decisions as a unit on product and service design and improvements.
Six Types of Customer Service
Up to the turn of this century, customer service consists primarily of in-person interaction at physical locations and contact center calls. Once access to the internet became mainstream by companies like AOL and Yahoo in the late 1990s, brands have new types of service available to engage an audience.
Today, there are six types of services brands should be familiarized with and mastered in managing customer needs and expectations.
- In-person (physical location/brick-and-mortar)
- Contact center (calls)
- Self-service
- Messaging/Social Media
- Chatbot
In-Person (Physical Location/Brick-and-Mortar)
Direct in-person interactions have always been the cornerstone of customer service since the invention of retail stores many centuries ago. Before customer relationship management (CRM) software was available, store owners would speak with each customer directly.
For example, a meat butcher would tell customers the type and price of the meat available, sell them the products, and would remember them on repeated visits. Loyalty is established with long-time customers who might get special prices or extra meat.
In-person interactions still play a key role in today’s retail environment. This is especially true in the luxury/high-value segments where relationship building through high-touch interactions may prevail over technology automation. Consistent training, flexibility to resolve problems, and detailed management oversight is key to success. Team members may be compensated higher and will typically stay with the brand for a long time. This creates a familiarity that is highly appreciated by this segment of customers.
In the mass retailing environment, in-person interaction may be more robotic with team members given less flexibility and tools to manage problems. Training and standardization are important. However, higher turnover due to lower compensation may reduce the opportunities for team members to build longer-term customer relationships. These team members will also require more management supervision.
Contact Center
Just as in-person interaction is well known, contact center (also called call center) or phone interaction also plays an essential part in customer service for many brands today. Contact centers may be managed by a brand’s in-house team or be outsourced to a third party. In many cases, contact centers are located remotely.
There are different levels of agents managing customer needs. Level 1 agents (low-touch) are given specific training to manage specific simpler customer requests such as account balance checks, paying bills with credit cards, or direct product or service purchases. They are not typically given the flexibility to offer solutions beyond the standard set of resources. Customers reach them randomly by dialing a hotline and are mostly not reachable directly.
Level 2, higher-ranked, or assigned agents are responsible for managing more complex customer issues that the Level 1 agents could not. Some of them are in supervisory roles and can be reachable with dedicated phone numbers or emails. This creates an option for them to foster better customer relationships that are likely, not possible by Level 1 agents.
Metrics should be designed and collected to get insights on call volumes, details, customer sentiments, and other signals in determining how well the brand is operating. Trends and customer feedback can assist in product and service improvements.
Consumers receive hundreds or more brand emails daily. These emails are typically automated, less personalized, and are not highly engaged (i.e., opened and actioned through clicks). This type of customer service can be perceived as highly impersonal.
Management relying on this type of engagement should evaluate the activation data to ensure that this is the preferred channel of communication for its customers. Otherwise, customers and brands miss out on opportunities to build better relationships, or worse yet, customers lose valuable information that could negatively impact them (e.g. if a brand does not mention that the customer must press a button in an email to activate a product’s warranty, this could be skipped over which could result in a declined warranty claim.
Self-Service (Physical)
Self-service alternatives have taken the world by storm over the past ten years. Kiosks line up many supermarkets, drug stores, airports, etc. which are designed with the goal to reduce employee count and improve checkout speed. This type of customer service is low-touch and does not require any in-person interaction unless a customer experiences an issue. They also do not incorporate up-selling features or build relationships.
In practice, some customers find the small self-checkout space uninviting and not customer friendly. They may require more time to complete the transaction than the old cashier method due to a lack of training on how to use the machines or the need to wait for one person handling many machines to fix an issue. The ones that like the convenient aspect of self-service would have preferred to see lower prices for a service they lost.
Management should be collecting metrics to evaluate how well these self-checkout solutions are performing before implementing them throughout their stores. Otherwise, they could face significant customer backlash.
Messaging/Social Media
Over the past five to eight years, messaging and social media have become the de facto and preferred customer service type for the younger generation of consumers. They are typically handled by a set of agents who might be responsible only for this platform or handle requests in addition to contact center duties. As responses could be in real-time or over an unknown time frame, it is recommended that brands establish a response expectation for their customers.
They are reachable through the specific account but the customers are likely not able to form strong relationships with these random unknown agents. Management should collect interaction data to evaluate how well this form of customer service is perceived and whether inquiries or issues are managed.
Chatbot
Chatbot technology is still in its infancy in design and execution. Many brands use it as part of their online self-checkout solutions providing customers with simple information or solutions. This form does not have any in-person interaction. The chatbot will ask customers to email or call the contact center for additional assistance on matters it could not handle. Some brands also include live agents who could handle more complex requests remotely.
Some customers are finding chatbots impersonal and typing their needs could be impractical over speaking to an agent. Their emotional well-being (especially frustration) is not always captured by the words to the chatbot or a live agent. This type of communication could increase the frustration quotient.
What Is Good Customer Service?
Good customer service can come in many forms. In general, brands should consider the following questions in evaluating how well their customer service is designed in relation to revenue generation, customer satisfaction, and employee involvement.
- How is customer service delivered in engaging, acquiring, and managing customers?
- How is the company maximizing its resources to anticipate, define, and refine customer needs and expectations through timely touchpoints?
- How often is the customer experience journey assessed for quality assurance and ensuring that corresponding customer service standards are updated?
- How is customer feedback collected and used to improve relationships, service disruption resolution, and operations?
- How has customer service evolved to follow the brand values and initiatives (e.g., ESG, DEI, sustainability, etc.)?
Final Words
There are six key types of customer service that capture how brands are managing customer needs and expectations today. There are many pros and cons for each type and resulting in different outcomes for the brands. In a future insight, Retail Mashup will go in-depth on how employee experience impacts customer service delivery. How can employees be empowered to do the best they can without feeling under-appreciated or burnout?
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