Serving customers at American Express Co. has grown more challenging for call center employees like Teresa Tate. And that’s just the way she likes it.
The financial services giant has scrapped scripts and entrusted call center agents with more independence as part of a customer service overhaul during the past several years. Rather than focus on holding down costs when card holders call in, American Express now aims to wow them with highly personalized service.
That means “customer care professionals” like Tate have to think more on their feet as they try to offer relevant information and assistance. Such responsibility motivates employees and makes their work more meaningful to them.
“We are getting more and more power to make the decisions at our level,” says Tate, who works at a major American Express service center in Phoenix. For example, if one of American Express’ small-business card holders calls in saying he has a conflict with a vendor, reps like Tate have the authority to set up a conference call to try to resolve the dispute.
Tate and American Express are at the forefront of a shift in thinking about how best to deliver service—and how people management underpins the customer experience. After decades of scrimping on customer service, businesses have begun to deliver a richer experience. And such companies as American Express, online retailer Zappos.com and telecom giant Verizon Communications Inc. are discovering that service quality depends heavily on workers who feel empowered and engaged.
“There’s no way to make lasting improvements in customer service without making a commitment to improving the employee experience,” says Bruce Temkin, managing partner of the consulting firm Temkin Group. “Unengaged employees can’t create engaged customers.”
At American Express, the new service strategy—dubbed Relationship Care—has emerged in tandem with a host of new people management practices. In addition to giving employees greater autonomy, the company has revamped recruiting, upgraded training, established new career paths and developed a sophisticated pay-for-performance system. That system, in turn, depends on a new method of employee assessment tied directly to customer satisfaction surveys, meaning that reps like Tate are under constant scrutiny.
But even as American Express has moved to a highly data-driven approach to workforce management, it has tried to preserve the “human” in human resources. The company, for example, has increased its efforts to help struggling employees succeed at the firm in recent years, rather than usher them out the door.
So far, this combination of exacting metrics and more sensitive employee relations has paid off in lower turnover and top-flight service. Indeed, American Express has earned J.D. Power & Associates’ top ranking for customer satisfaction among credit card issuers for three years running. But the company will face challenges in trying to retain its stellar rating. The high-touch service could become too expensive to maintain, and skilled customer service professionals could be lured to other companies as the job market rebounds. What’s more, the company will have to balance the benefits of employee independence with the danger of call center agents making bad decisions that alienate customers.
“You make jobs more pivotal when you allow more discretion,” says John Boudreau, management professor at the University of Southern California. “Sometimes you’ve got to allow some downside risk in order to get the upside benefit.”
A new call center model
The American Express customer service center in Phoenix is a nondescript office complex made up of two four-story buildings. Roughly 3,000 service agents sit in aisle upon aisle of beige cubicles, taking calls from small-business clients, speaking with merchants about card acceptance and working on fraud cases.
On the surface, it looks like many generic call center operations, which have been called the factories of the 21st century. Akin to the way some assembly line workers have long performed the same task again and again, many call center workers follow stilted scripts and are closely monitored to ensure that they adhere to the rigid routine.
A decade ago, American Express’ Phoenix call center would have conformed to that model in most respects. Take turnover, for example. Although not as high as the 100 percent annual turnover sometimes experienced in the call center field, the attrition rate for customer service agents was in the double digits and a pressing concern for the company.
Customer service also suffered as American Express sought to maximize the number of transactions per agent per day. Its nod to service came primarily in the form of a checklist for such behaviors as saying the customer’s name three times during a call and avoiding 10 seconds of awkward “dead” time on the phone.
Today, what happens in those Phoenix cubicles is far different. Agents like Aaron Bremser engage in open-ended, unscripted conversations with small-business customers who call in. Rather than worrying about getting off the phone as fast as possible, Bremser seeks to deepen the relationship with the customer—and ultimately boost card spending. He may ask how business is going, with an eye toward seeing whether the client can benefit from the company’s many card services.
“Most people want to talk about their small business because it’s their baby,” Bremser says. On the other hand, he adds that he’s “not afraid to ask a tough question” to better understand and serve the customer. For example, he might ask: “When do your customers pay you?” “What terms do you give your customers?” “Are you having trouble collecting receivables?”
If Bremser’s questions are too invasive, he can find out quickly. Some of his customers answer feedback surveys, and their responses typically are available to him within five to seven days after a call. He and other agents access the feedback through a reporting system that shows their recent customer satisfaction results, their aggregate results and how they stack up against peers. Agents’ performance and pay are determined to a large extent by how well they fare on a question commonly used in service arenas: Would the customer recommend the company to a friend?
Bremser’s recommend-to-a-friend scores dipped during the recession—a problem he chalks up to spending too much time offering his own analysis of macroeconomic trends to customers. But the company’s relentless measurements acted as a self-correcting mechanism. Low scores, along with coaching from peers and his manager, convinced Bremser to change his approach. Now he once again ranks as one of the top-performing agents in the Phoenix center. Overall, the move to trust agents like Bremser is resulting in better service.
When agents reinforce card benefits and features through the Relationship Care program, recommend-to-a-friend scores rise by an average of more than 10 percent, the company says. Last year, J.D. Power & Associates found that 82 percent of American Express cardholders were aware of the benefits and services associated with their card, compared with an industry average of 70 percent.
Cultivating customer service
The recommend-to-a-friend focus is largely the work of Jim Bush, executive vice president for world service at American Express. In 2005, CEO Kenneth Chenault tapped Bush, then a 24-year American Express veteran, to lead the service organization in the United States. At first Bush wasn’t sure it was a promising career move. Even though technically a promotion from his position as regional president for the Japan, Asia-Pacific and Australia markets, the new job sounded like a low-profile, back-office role.
But Bush realized he had the chance to make a difference. As he saw it, high employee turnover and the focus on lower-cost service were starting to affect quality. “Over time, the service had eroded,” Bush says. “I got inspired.” Bush and his colleagues quickly shook up the customer service culture at American Express. The company’s Relationship Care effort is designed to treat customer service not as a back-office cost center but as central to the firm’s success. Bush and his team also connected the new mentality with a legacy of service dating to the company’s origins in 1850, when it delivered valuables and freight across the United States. “We brought it back to its heritage,” Bush says.
Companies pursuing higher-touch, higher-quality service have found that it hinges on internal people management. Recruiting and training play key roles. So does inspiring workers, rather than simply trying to motivate them with carrots or coerce them with sticks, says David Greenberg, executive vice president at consulting firm LRN. Employee empowerment and a compelling mission help fire up the troops, he says. It can be a real differentiator when companies “succeed in communicating and demonstrating to their people that each of them is playing an important role in something significant,” Greenberg says.
Some companies have adopted lofty goals, like Zappos’ pursuit of greater world happiness or Hilton Worldwide’s vision of “Filling the earth with the light and warmth of hospitality.” The American Express vision, according to its corporate citizenship report, has a plainer, more practical ring: “To become the world’s most respected service brand.”
Bush says the goal of becoming a world-class leader in service—competing with the likes of the Ritz-Carlton Hotel Co. rather than other call centers—has invigorated the service reps on the front line. Indeed, some agents in the Phoenix center are stirred by the challenge of providing great service. Tate is among them. She ran a restaurant and bar before coming to American Express about three years ago, and that experience shapes her view of each small business that calls in with card questions. “I genuinely feel like I’m in this company’s finance department,” she says. “Having been in small business myself, you need that support.”
Changing the culture
Tate’s employment history fits well with the way American Express has changed its people management to execute the new service strategy. The company decided to focus on hiring agents with a hospitality or other service industry background, instead of simply seeking call center experience.
Bush also asked call center reps what would motivate them to deliver extraordinary service. Their workplace wish list included better incentives, more career mobility, more flexible hours, increased recognition for their efforts and streamlined processes.
In response, job flexibility increased, and new job categories were introduced so agents could progress through four levels rather than remaining stuck in one. There were symbolic gestures, as well. The company changed the job title from “customer care representative” to “customer care professional,” and gave agents business cards for the first time.
Training shifted from an emphasis on technology to “soft skills” such as interpersonal communication. American Express also changed its compensation plan, so agents could more easily earn bonuses based on customer service scores. Newly hired Phoenix customer service agents start with a base salary of about $30,000 but can earn up to 35 percent of their base pay in bonuses, with the rewards given out every two weeks. The bonuses depend to a significant degree on agents’ recommend-to-a-friend scores.
Individual agent compensation has increased under the new regime, Bush says. But overall costs are falling, in part because of lower training expenses thanks to reduced turnover. And American Express says that Relationship Care conversations contribute to a boost in card-member spending of 8 to 10 percent on average.
The wisdom of relying heavily on incentive pay has come into question in recent years. And extensive use of metrics can alienate employees by reducing their performance assessments to simply how well they do on discrete tasks. “Traditionally, having a lot of data on employees was synonymous with objectifying them,” says Boudreau, the USC management professor.
But it’s possible to blend workplace data with a benevolent approach to employees, Boudreau says. He points to IBM Corp., which has set up a system for codifying job skills that both enables the company to manage its talent better and helps employees choose the right training courses to stay competitive.
For its part, American Express wants to combine precise performance analysis with attention to the “whole” employee, says Thomas Parker, human resources vice president and relationship leader. Parker, who is based in Phoenix, says American Express aims to give employees four things: tools needed for the job; compensation and rewards; assistance with other aspects of their lives such as financial planning; and attention in the form of nurturing and care, demonstrated by programs such as an on-site health clinic and exercise classes.
“Nurturing and care” may sound touchy-feely for a Fortune 100 company, but Parker says that if the needs of employees are addressed in a holistic way, they are more likely to be solid, long-term performers. Otherwise, he says, they are more apt to run into problems that will hurt their work performance or lead them to quit.
“It is a recognition that no employee checks his or her life at the door,” Parker says. “We recognize that we all bring our personal, family, financial [and] health challenges with us to work.”
The conviction that caring for employees can improve customer care is evident in a new approach to helping struggling performers. Five to six years ago, employees with performance problems were put on a remediation program. But it was typically a formality, and they tended to leave. Now the company sets up incremental goals for low performers, offers coaching from supervisors and experts in their job function, and provides additional training when necessary to struggling employees. Most end up staying. “Our success rate is well over 50 to 60 percent,” Parker says.
The U.S. employee attrition rate fell by half from 2006 to 2009, and Parker says most of the reduced turnover was achieved before the financial crisis of 2008.
But is American Express reverting to an outdated paternalism better suited for the 1950s era of lifelong “company men” than the 21st century’s job-hopping free agents? The company doesn’t believe so; it frames its approach as more humanistic than paternalistic. During the recession, for example, it didn’t hesitate to lay off employees to cut costs, axing about 7,000 jobs, or 10 percent of its worldwide workforce. The company, however, did try to shield frontline customer service jobs during the downsizing.
American Express concedes that some of its agents may jump ship for other job opportunities as the economy recovers. But the company views investing in people as a retention tool—both for employees and customers. Its emphasis on career development dovetails with workers’ desire these days for greater employment security.
The Relationship Care program is also a powerful recruiting tool. During a recent training session for new employees at the Phoenix service center, trainee Jennifer Paez revealed that her mother owned a beauty salon and used an American Express card for her business. Paez said her mother always seemed to have a good experience when talking with American Express service agents. “Every time she gets off the phone she feels better,” Paez said. “I want to be one of those people who makes that happen.”
Workforce Management, August, 2010, p. 16-20 -- Subscribe Now!