Customer service

Only one-third of customers are satisfied with the state of customer service, according to a survey of 4,236 people in the U.S. and U.K. released in June by NICE.

Nine in 10 consumers will pay more for good customer service, NICE found. Just over half of respondents said a positive customer service experience make them more likely to consider using a brand again.

Happy reactions to customer service crop up frequently. The majority of consumers, 9 in 10 expressed happiness from friendly service or a quick or seamless experience. More than half reported feeling happy because they received a discount or freebie in the past month.

Good in-person service, whether from a friendly barista or a helpful retail associate, can ensure positive experiences even under difficult circumstances. Bad service can take a direct toll on a company’s bottom line.

Some shoppers will inevitably need to wait for service on busy days, according to customer experience expert and author Shep Hyken. However, if workers treat that customer with respect and care, they will still depart with a lasting positive impression.

“That doesn't mean you need to spend any more time with them,” Hyken told CX Dive. “It's the eye contact, the smile, the attitude, the appreciation that you show — that's so important.”

For instance, a customer may receive the wrong entree at a restaurant. If the server immediately recognizes the problem, apologizes and brings a replacement, the customer is more likely to see the slip-up as an honest mistake than a sign of poor service.

AI can complement customer service, particularly in the call center, but it’s not a substitute for the human element.

Two in five respondents say companies can use AI to make them happier by resolving their issues faster. However, consumers still want knowledgeable agents to help them handle any queries they find too complex for automation, according to Omer Minkara,VP of principal analyst at Aberdeen.

“It doesn’t matter how much you personalize an interaction or how many niceties you say on the phone if you don’t address your customer’s core human needs,” Minkara said in the report.

When it comes to calling customer service and successfully reaching a live agent, Rob McDougall knows all the tricks. The CEO of Upstream Works Software, which provides omnichannel contact center solutions, is no stranger to pressing “zero” repeatedly when met with automated call options. 

He knows that saying “agent” over and over can redirect the line. 

But when McDougall called an airline's customer service line recently, none of those tricks worked. He told CX Dive that he was directed through five or six submenus before being put through to a live agent.

“They had put up what I would call, ‘speed bumps,’ in the way of getting to an agent to try and cut down on that traffic,” McDougall said. 

Using interactive voice response, known as IVR, to whittle down the number of callers is a common tactic across industries. Zendesk’s 2024 trends report found 60% of consumers report being frequently transferred to another agent or department when they call customer service.

The reasons for these layers of service are financial, Dale Renner, CEO of consultancy Redpoint Global, said in an email. McDougall agreed, explaining that large call volumes create demand for more agents, which companies would rather not pay for. 

There are costs to having too many speed bumps, however. 

“A customer frustrated by their inability to connect with a live person or a live interaction that went poorly is potentially a long-tail disaster,” Renner said. 

Behind the bumps

IVR came onto the scene in the early 2000s, McDougall said. And it successfully reduced the workload for call center agents, as well as the time customers spend on hold. 

Initial IVR-based interactions get the more administrative tasks out of the way, such as names and account numbers. As McDougall said, having live agents go through these steps is not a good use of their time. The next set of IVR dialogue is typically geared toward pushing customers to other automated or digital channels, whether it's a website or chat. These “speed bumps” deflect about 15% of incoming call traffic from live agents, McDougall said.

“Having a person on the phone in a contact center is the expensive option,” McDougall said. 

The technology and telecommunications infrastructure in a call center generally makes up about 30% of costs, he said. The remaining 70% stems from human resources expenses. 

But IVR doesn’t need HR.

Customers have “cautiously” been open to chatbots, messaging and email, according to Zendesk’s report. But phone calls are still the preferred contact method for both general issues and more complex problems, the report said. 

In situations like McDougall’s call to the airline, a phone call is sometimes the only option. He wouldn’t have dialed in if he could have resolved his issue another way. 

Customers don’t typically expect to be connected to a live agent immediately — they go into the call understanding the potential hoops they may have to jump through. Zendesk found customers expect a higher level of customer service over the phone. And when that doesn’t happen, it can negatively affect CX and, ultimately, business. 

If a customer has a negative experience with a call center, there’s a chance that anecdote will spread far and wide.

“Customers will turn to social media and review sites to memorialize their bad experiences for all the world to see,” Renner said. The worst case is that may encourage others with similar experiences to vocalize them or deter people from patronizing that business, he said. 

Getting ahead of the call

Despite the threat of dented loyalty and satisfaction, the case for improved call center operations can be a tough one to make to the C-suite. Businesses usually don’t have the data needed to prove one bad phone call led to the loss of a customer, McDougall said. 

Plus, reporting from different customer service channels can be siloed he said

There might not be a record of a customers’ full journey from chat to call, including if they're speaking with multiple agents — sometimes from multiple departments. 

“You have to be able to tie all that stuff together,” McDougall said. “But most people can’t provide that level of reporting.”

The Zendesk study found that just 2 in 5 CX leaders said they planned to increase their budgets for phone support in 2024. But, of those who see significant return on investment from CX tools, 54% are more likely to be actively exploring how to better integrate voice and digital channels. 

If an agent on the phone can reference a chat the customer had, it can help build confidence in the chat, McDougall said. And if more people have more trust in digital channels, that can help divert call traffic before the call is even made. 

Renner agreed that keeping people off the phone is perhaps the most effective way to mitigate frustrating phone experiences. Responding to customer signals in real time across all engagement channels can help companies do that. 

“Actively listening for customer signals is important for delivering a personalized CX, but it’s the unified customer profile that infuses those signals with the contextual understanding that a brand needs to respond with the right offer, content or message at the moment of interaction,” Renner said, “long before it gets to a frustrated live agent call.”

The pandemic raised customer expectations of what makes for a good customer experience and those raised expectations have yet to abate, according to a Gallup analysis of nearly 19,000 employees released in March.

More than half of employees — 56% — say that since the pandemic customer expectations have shifted. More than 2 in 5 employees said customers demand higher levels of service, and over a quarter of employees said customers have greater expectations for virtual or remote service.

But to the employees serving them, companies are falling short and aren’t adequately staffing workplaces to keep pace.

Less than a quarter of employees believe that their organization fulfills its service promises, and only 30% expressed pride in their organization’s products or services.

Those findings are supported by others. Customer experience quality dipped in 2023, according to reports from Forrester and KPMG. And customers are noticing.

“While customer expectations continue to rise, firms aren't keeping pace with that,” Judy Weader, a principal analyst at Forrester, told CX Dive. “Then of course that gap [between quality and expectations] is going to become more evident.”

The pandemic amplified customers' desires for better delivery and pick-up options, according to Ed O’Boyle, global practice leader for Gallup's workplace and marketplace consulting and an author of the report.

“The pandemic created a different set of consumer demands around the way they want to receive service across the continuum,” he said.

But after the pandemic, many firms reversed some of those offerings — like curbside pickup — and returned to their more limited service offerings of 2019, according to Weader. Customers have not been happy.

Inadequate staffing

In another survey, Gallup asked 10,000 employees and 100 chief human resource officers at Fortune 500 companies what they thought the biggest barrier was to delivering exceptional products and customer service.

More than 2 in 5 employees and 30% of chief human resource officers thought staffing or not having the right number of people to do the work was the greatest barrier, according to Gallup. Training and having the knowledge to get the work done was listed as a distant second.

O’Boyle credited staffing challenges to a few factors. Many organizations have struggled to fill frontline roles, particularly in healthcare, hospitality and retail.

In other situations, businesses have tried to become more efficient and cut back on staff. Even if those cuts are only to employees who help customer-facing staff, it puts pressure on those frontline roles, he said.

High rates of turnover have also impacted service.

“When you have open roles and constant turnover, you’re constantly having to train your new employees,” he said. “There’s a learning curve associated with that.”

But when employees are supported to meet customers’ expectations, it’s a win-win situation.

“We have found that when employees feel like they are able to deliver on the promises they make to their customers, they are more likely to be engaged, have higher wellbeing, and less likely to be burned out,” O’Boyle said.

An overwhelming 95% of contact center supervisors believe their agents will have to handle complex or unique customer inquiries in the future, according to a survey of 366 contact center leaders by Customer Contact Week released in February.

AI will be key to meeting this need, according to the survey. More than 4 in 5 leaders feel agents spend too much time on simple interactions. But nearly 9 in 10 expect AI to power more self-service options, which could free up agents to handle more complex inquiries with a personal touch.

Taking full advantage of these opportunities will require skilled and empathetic workers. “If contact centers want to deliver more personalized, human-centric experiences, they will require agents who can appeal to customers with different sensibilities,” Brian Cantor, principal analyst and director of CCW Digital, said in the report.

The role AI plays in enabling self-service and helping agents dig up relevant information are well documented, but companies are investing in other AI use cases as well, the CCW survey found. 

One potentially valuable use for AI is customer sentiment analysis — an area 82% of brands are exploring, according to the survey. 

In this role, AI acts as a filter to quickly identify the purpose of a customer’s inquiry and their emotional state, according to Kelly Pedersen, U.S. retail leader at PwC. This helps the agent prepare for a particular call before they even pick up.

“This allows the agent to have a more personalized interaction with the customer, as they already have some context about the customer's needs,” Pederson said in an email to CX Dive. “Additionally, this filtering process helps streamline the customer service workflow, making it more efficient from the perspective of both the customer and the agent.”

Companies also need to remember that AI is often just an assistant — and not a replacement for staff, Cantor said. Rather, companies should be providing agents with the right training to fully take advantage of the opportunities the technology presents.

J. Jill in April announced “a comprehensive brand transformation” dubbed One Wardrobe. No Limits, which has been in the works for three years and includes upgrades and elevated customer service in some stores.

The rebrand was informed by a survey of 1,000 women 40 to 65, conducted by Wakefield Research, which found that 42% are frustrated when choosing something to wear from their closets, and that, on average, more than a third of their clothing hasn’t been worn for at least two years.

After narrowly avoiding bankruptcy during the height of the pandemic, the women’s apparel retailer has worked to turn itself around. Last year, the retailer’s net sales fell 1.7% to $604.7 million, with comps down 1.4%, and net income declined to $36.2 million from $42.2 million in 2022.

J. Jill enjoys a loyal following among its target 40-plus demographic, with an average customer tenure of 10 years. But consumers’ reluctance to spend much on apparel has challenged its turnaround. An extra week in the fourth quarter helped J. Jill eke out a net sales increase over the holidays, along with gross margin expansion, though comps (both stores and online) fell 3.6%.

The retailer aims to boost that with an elevated store experience and new marketing. Imagery in stores will reflect “the totality of women’s lives and demonstrates the versatility of key products,” per a press release. Some stores will get a dedicated “One Wardrobe. No Limits. styling feature that showcases hyper-versatile pieces and encourages customers to leverage store associates for personal styling advice.” National marketing will also emphasize how J. Jill clothes “perfectly complement their multifaceted lives and showcase her totality.” QR codes integrated into catalogs and the website will enable discovery and help customers explore outfits.

“In our ongoing dialogue with customers, we’ve recognized the need for a wardrobe that reflects and supports the totality of a woman’s life,” CEO Claire Spofford said in a statement. “We aim to outfit her for all she is and wants to do and believe that a well-curated wardrobe of versatile, fabric-first and high-quality clothing is integral to that pursuit.”

When Senate Democrats introduced a bill that would discourage companies from moving customer service operations overseas earlier this year, it resurfaced the long-debated issue of the merits of outsourcing. 

The legislation, which is currently in committee, could withhold federal grants from companies that relocate operations overseas, among other penalties.

It’s unlikely that the bill will pass in the near future, according to Elena Lopez, senior legislative specialist at Communications Workers of America, a communications and media labor union. Either way, keeping customer service at home has its advantages, she said.

"I think the benefit is that you can say we are an American company that uses call centers here,” Lopez said. “Our workers know what's going on, can better help you and they're more available.”

Yet, CX leaders are under pressure to deliver results on limited budgets, and call center outsourcing is an attractive way to cut costs, despite customer service quality and data collection risks. 

When money is on the line, cost savings trump many other concerns, according to Max Ball, principal industry analyst at Forrester. Call center operations in general suffered from budget cuts in 2023, bringing offshoring conversations to the forefront. 

"The truth is when the economy goes down, contact centers get their budgets cut,” Ball said. “So, to the extent the economy has been going down, they're going to be doing more offshoring because it's cheaper.”

Pros and cons of offshoring customer service

It’s hard to measure the quality of customer service solely based on where a call center is located. 

The biggest global call center providers offer agents on par with those employed by U.S. companies and give them access to modern technology, according to Cantor.

“The truth is, there's not a guarantee that the actual customer experience delivered by outside agents is worse,” Cantor said. “I can tell you, as someone who's toured contact centers in other regions, they've had a lot of awesome technology and valuable training for a long time.”

It’s easier to have 24/7 coverage with global operations, according to Ball. Workers in other time zones can pick up shifts that would be difficult to staff in the U.S.

However, local call centers can hold an advantage in understanding the finer details behind a query, particularly for service-oriented businesses like wireless network providers and utility companies.

An agent in a regional call center is more likely to be aware of up-to-the-minute information regarding major disruptions, which can help them sympathize with a caller’s plight, according to Lopez.

“Having someone like in the area that knows what's going on is an advantage,” Lopez said. “They can tell you there's a power outage because a truck hit like a power line, or there's a bad winter storm going on in Minnesota, so it's affecting our internet coverage.”

Security isn’t the only data consideration

Data security and analysis can be complicated for call centers, and outsourcing even some of the work can add further wrinkles.

Some consumers and lawmakers are concerned that countries with cheaper labor also have weaker data protection laws, according to Lopez. Personal data can be at greater risk when companies and their employees have less incentive to protect it.

However, major offshoring companies do business globally, use the latest security technology, and have every incentive to keep data safe, according to Cantor. There are some minor risks due to data crossing more hands, but many concerns are “superficial.”

Outsourcing can still have a negative impact on data best practices even if it’s handled safely, according to Ball. The problem isn’t that bad actors will access sensitive information — it’s that splitting data between companies makes it harder to track.

“Typically, companies don't have all their agents outsourced. It's a percent,” Ball said. “So having some people on your internal systems, with your hardware and software, and other people on an external system makes it really tricky to control everything.”

Generative AI will change the face of support

Generative AI is poised to change the nature of offshoring as much as every other part of the customer service industry. If automation takes on a larger share of customer service inquiries, the cost saving from outsourcing could become diminished. 

Many companies route the most complex calls to in-house teams; those calls will remain beyond generative AI’s capabilities, according to Ball. But for simpler cases, not even the least expensive human labor can compete with the price tag on automation.

The burden will fall on outside call centers to provide a certain level of automation alongside the talent necessary for an appreciable share of complex inquiries, Ball said. Certain tiers of calls require certain levels of service, and the best offshoring companies will be able to handle them all.

“Their story can’t be ‘I'll get you a bunch of bodies real cheap,’” Ball said. “Their story needs to be, ‘I'm going to take care of all of your needs.’”

More than 4 in 5 call center workers say the pressure of their role weighs on their mental wellbeing, with nearly all — 95% — reporting decreased productivity as a result, according to a survey conducted by Censuswide on behalf of DigitalGenius and released in May.

Three-quarters of agents say having daily or weekly ticket targets increases their stress, according to the survey of more than 500 customer service retail workers. Seven in 10 would prefer to handle fewer, but more complex, tickets each day.

Stress and dissatisfaction are associated with higher agent turnover, leading to increased hiring expenses and lost productivity, according to DigitalGenius.

Call centers can drive better customer service and loyalty when they help agents manage their mental well-being. 

Agents often feel pressure to get through all their tickets, according to Jonathan Schmidt, senior principal analyst at Gartner. In a rush to get to the bottom of their list, agents might focus on handling inquiries quickly rather than solving the root cause of the problem, leading to repeat calls.

“An agent might also be abrupt in tone with a customer, be unwilling to ‘go the extra mile’ or force them to repeat information, as the agent isn’t clearly focused on the interaction — all yielding poor customer experience outcomes,” Schmidt said in an email.

Call centers can reduce agents’ workload by encouraging self-service options for simple inquiries, according to Schmidt. Companies can utilize chatbots and make their sites easier to use to remove some of the burden from agents.

“This allows remaining service contacts to be channeled to live agents who are enabled with technology and possess the skills needed to resolve the issue and drive value to the customer,” Schmidt said.

Companies looking for ways to help employees can conduct small agent experience reviews to uncover process or technology hiccups causing frustration, Schmidt said. Some of these issues can be easily corrected and yield immediate results.

For example, call center leaders can work with workforce management teams to offer “mini-breaks” or chances to decompress, according to Schmidt. Leaders can also offer supervisors coaching and resources to help them better manage the mental health of their teams.