Customer experience: A journey, not a moment

Wick’s against-the-grain and often counterintuitive transformation of American Home Shield’s customer service model resulted in an approach focused on the end-to-end customer journey. This has allowed the company to realize tremendous gains in customer satisfaction and actually save money in the process.

Companies often take a “moment of truth” approach to improving customer satisfaction: They look at a particular touchpoint in the customer’s experience with the company (say, when the customer places an order or calls for customer service help) and seek ways to improve that moment.

“Looking at individual touchpoints or moments of truth can improve the customer experience a bit,” explained Dilip Bhattacharjee, an associate partner with McKinsey & Company. “Yet for the customer, the real experience is not a moment, but a journey.” Improving customer experience requires a holistic look at the entire journey, end-to-end.

Marty Wick, vice president of operations at American Home Shield, took McKinsey’s customer journey theory and implemented it. Introduced by Bhattacharjee, Wick told his story at the 24th Annual Compete Through Service Symposium presented by the Center for Services Leadership at the W. P. Carey School of Business. At first against the grain, sometimes counterintuitive, Wick’s transformation of American Home Shield’s customer service model has dramatically improved customer delight.

Do what feels good for the customer

American Home Shield is a $750 million home warranty company, the largest in the United States, by far. Customers pay an annual premium and in return they can call American Home Shield anytime if a home appliance or system (from the refrigerator to the water heater to the plumbing) needs fixing. Wick explained, “Our customers don’t want to deal with the hassle of finding the contractor and managing them through the process of fixing the problem. We take that off their hands.”

To deliver that service, American Home Shield relies on a network of 10,000 independent contractors across the country. The company’s own employees take the customer’s call, dispatch the contractor and manage customer service issues. “So I can promise you there are quite a few challenges with delivering a uniform customer experience,” Wick said.

Indeed, despite the fact that American Home Shield is an industry giant, over the last few years the company has struggled improve its customer retention rate, and drive organic growth. “That’s not a long-term recipe for success,” Wick acknowledged. Since he took over as vice president of operations in June 2012, “We’ve started to turn that around.”

“My company historically made a lot of decisions that felt really good for the employee and felt really good for the contractor, over time losing sight of what felt really good for the customer,” Wick explained. So he mandated a renewed focus on doing what’s good for the customer. “That’s very motherhood and apple pie — obvious,” Wick acknowledged. “But it is one thing to say we’re going to do it and talk about it with your associates, your management team. It is a very different thing to live by it.”

Wick explained, “When you start making decisions for your customer, some of your employees who were feeling really good might not anymore; same with the contractors.” Indeed, many of the decisions that Wick made as part of a focus on the customer journey were difficult, sometimes unpopular — at first. “Many of the employees and contractors pushed back really hard when we started making such drastic changes, but once the positive results started coming in, most have been pretty happy to get onboard.”

Become intimately familiar with the customer journey

After renewing a focus on the customer, Wick reorganized. “We had been very siloed,” he said. “The customer service team never spoke to the contractor management team. And when something went wrong, it was a blame game with fingers pointing in every direction.” So Wick created a cross-functional team he calls the innovation lab, to learn about every aspect of the customer journey.

The innovation lab has become American Home Shield’s “secret sauce” for improving the customer experience. “It teaches us what’s really going on in the business,” Wick said. “The answers have been there for thirty years, we just couldn’t get to them.”

Wick explained how the innovation lab works: “We brought our best frontline associates from all the different functions, put them in a room with some really smart process improvement people and let them have at it. They’re treating each service request that they monitor like it’s a piece of inventory and they’re walking it through the ecosystem. For the first time at a micro level we’re able to see the bottlenecks and breakdowns in our service processes. Places where the customer’s expectation and our delivery were misaligned.”

Do what the data says — even if it’s counterintuitive

Sometimes, the insights that come out of that process are counterintuitive. For example, the innovation lab revealed that customers care a lot about whether the service appointment is set within 24 hours of their initial call. “No surprise there,” Wick said. “But here’s what surprised us: If we get the appointment set within 24 hours of a customer calling us, even if we mess up every other step in the customer journey, we’ll get a very high customer service score.

But if we don’t schedule the appointment until hour 30, even if we excel on every other step, we’ll get a low customer service score” That may sound counterintuitive and it doesn’t change the fact that the customer wants — and we want — to fix the problem as soon as possible,” Wick said. “But we run into it all day every day in the innovation lab and we’re proving it with net promoter scores and customer retention scores.”

Other times, innovation lab insights are downright confounding. “We learned that we should de-prioritize some types of customer calls and prioritize contractor calls,” Wick explained. In other words, there are customer calls that the call center operators should answer only after key contractor calls are answered. “This was a radical change for us, but when we looked at the data, we knew this had the potential to provide our customers with a better experience across the entire journey,” Wick said.

It worked. “Our status-related customer call volume has plummeted because we’re now taking care of the contractor who is then taking care of the customer. It seems so simple now. But 16 months ago it was revolutionary.”

Another example of a counterintuitive lesson learned in the innovation lab: lower customers’ expectations to increase delight. For American Home Shield, water heater service requests historically had the lowest customer service scores of any transaction. “I will tell you that consumers have a lot of passion around hot water,” Wick joked, and customers felt like they weren’t being well served when it came to water heater service requests.

“So in the innovation lab, the team looked at how we get better at serving customers’ needs around hot water heaters. These can be some of our most expensive service calls, but we weren’t delivering what the customer was expecting.” The answer: trick the system.

“We decided to email customers as they place water heater and appliance requests and not only remind them about what’s covered, but also help them understand what to expect. For instance, some repairs may take more than one visit, especially if parts need to be shipped in,” Wick explained.

It worked. “We’re delivering what we always had, but now it’s what the customer expected,” Wick said, “yet they’re scoring us as if we achieved far higher.” The company’s net promoter score on water heater transactions increased from 5 to 25; what used to be the top issue for customer escalation is now not even on the list. “We’ve revolutionized the way that we service water heaters.”

Do it all for less money

Wick’s against-the-grain and often counterintuitive transformation of American Home Shield’s customer service model, to one focused on the end-to-end customer journey, allowed the company to realize significant gains in customer satisfaction and actually save money in the process.

“18 months ago I wasn’t sure there was enough money in the budget to fix all of the problems,” Wick said. “But in reality, we haven’t spent any more money. In a year where we funded the new innovation lab, we’re actually on track to spend less than the year before. At the same time, service requests are up about 5 percent and customer delight is up 200 basis points,” said Wick. “We can have our cake and eat it too.”

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