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All customers are not equal. Some customers are more profitable than others. Therefore, companies need to spend more to serve and retain the profitable customers. In essence, companies should understand the profitability of different segments of its customer base. And yet few companies actually measure the profitability of its different customer segments. Without understanding needs and profitability by segment, it is difficult to prioritize customer service investments and prescribe customer service levels. In the end technology alone will not resolve customer related issues. The key to success is to use technology to eliminate routine tasks, thereby giving CSPs greater time to bond with customers through direct interaction.


In the future, the competitive success of service organizations will depend largely on how successfully they can respond to changing business and social environments. Advances in information and communications technology and shifts in customer needs and demographics also will exert considerable influence on those organizations. Companies must therefore seek to better understand the changes that will affect both service processes and service encounters going forward.

One critical area of focus for companies will be the identification of appropriate roles and skills for their customer service professionals (CSPs). Although it is increasingly popular to suppose that technology will to a great extent replace customer service provided by human beings, many service encounters will continue to need a human touch. Indeed, the success of many service encounters must and will depend on the attitudes and skills of agents.

Key questions this Market Insight will address include the following:
• What are the future expectations for human interaction in customer service?
• What will be technology's influence on customer service in the future?
• What will be the key competencies for agents going forward?

The Impact of Technology and Demographics on Service Delivery

As faster, higher-capacity broadband technology makes knowledge more accessible to an increasing number of organizations and customers, web-based information and communications will continue to expand. Mobile devices will connect and integrate knowledge systems for customers and service organizations, increasing service encounters and the value of networks. Automated "smart" devices such as meters for gas and electricity will work remotely and intelligently to relieve service agents and customers of repetitive tasks.

Meanwhile, changes in customer demographics and lifestyle continue. Consumer lifestyles are changing as single households become more prominent and as the "24 x 7" society grows ever more pervasive. For example, according to the United Kingdom Census, the total UK population will remain stable over the next decade but with fewer customers in the - year age band, and more customers will emerge in groups comprised of the middleaged and those over-65. In addition, the customer service workforce will be influenced by other changes in the nature of work. For example, in the UK, a "skills gap" is anticipated in the coming decade due to changing demographics – especially the decreasing proportion of young people that will comprise the total UK population. Increasing flexibility in work time and location should be another important development.

Such trends mean that the customer service industry will need to adapt. Integrated knowledge systems will enable a wide range of tailored services, but such technological opportunities will have to be balanced against the costs of automation and the expectations and technical sophistication of customers. Demographic and lifestyle changes should produce an increase in "non-standard" employment contracts. In essence, changes in technology and employee expectations will mean that future CSPs will be more likely to work from home or other locations.

Human Interaction in Service Delivery

Clearly, so much of customer care is dependent on the capabilities and motivation of the agents involved. CSPs must be aware of the subtleties involved in today's rapid and often fractured communications environment.

For example, low service quality often has a greater impact than service quality that exceeds expectations. Indeed, some emotions trigger an instinctive "mimetic" response. When a customer displays impatience or annoyance, she may well expect that the agent will take action to resolve the issue.

This is another way of saying that emotional intelligence (EI) is particularly important in customer service. The display of positive emotions or the suppression of negative emotions have different effects on individuals. To complicate matters further, "surface acting" – the requirement for employees to manage their own emotions while caring for or managing the emotions of others – can have potentially negative consequences on stressed agents. And things like job involvement and autonomy can affect whether or not CSPs experience emotional exhaustion.

Meantime, technology is playing an increasingly important role in service delivery as CSPs adapt to the complex expectations of customers. Technology-enabled systems are delivering customer service in areas such as hour service, personalized service, and rapid service delivery. Such systems affect how CSPs interact with customers and where they work. Pleasing customers has beneficial effects for all concerned, and the reverse is also true. Agents regularly deal with people who are angry, upset, or anxious, and those agents are expected to manage emotions throughout.

In fact, technology is opening up many opportunities for contact centers, but the reaction from an increasingly diverse customer base is mixed. While the way in which customer service is delivered is critical (fully automated or personalized service), so too is the emotional experience and reaction of customers. Consider that technical and emotional factors inherent to such a complex environment place new demands on CSPs. Still, it's true that technology frees up CSPs from repetitive duties and enables more flexible working arrangements and locations. Along with remote working and specialization of service, technology also is spawning new communication channels, including email, chat, and social media.

The work environment also is growing increasingly complex, technical, and diverse. In the future, relatively advanced interpersonal and technical skills will be needed in order to offer more personalized and differentiated customer care. More and more, the emotional intelligence of agents will be a necessity. After all, agents are recruited to undertake roles that require both emotional interaction and technical competence, although the mix and emphasis vary. The job of an agent also often demands multi-tasking and/or specialization.

Frost & Sullivan also notes that the landscape an agent confronts is evolving – from interpreting service issues, navigating technology, and managing diverse channels such as email chat/social media. Interpreting customer issues, assessing business values, and maintaining organizational awareness from a remote location are skills likely to be required in the future.

Indeed, more than ever, agents will need to handle technical complexity while distilling and communicating technical knowledge. Meanwhile, customers will be less tolerant of unclear, complex, or patronizing instructions and far less tolerant of technology that fails to operate effectively or meet their needs. In the end, advancing technology will lead to further agent specialization while influencing the growth of virtual (home based) service and new modes of communication. Agents will be trained to handle fewer simple, repetitive tasks while confronting increased levels of complexity. For example, insurance companies will reward highly-skilled agents that excel at customer retention and up-sell/cross-sell, whereas public utilities will expect agents to handle the vast majority of contacts, regardless of the type of account.

Table Of Contents

Technology and Human Capital: Future Directions for Customer Service
Table of Contents

1. Introduction
2. The Impact of Technology and Demographics on Service Delivery
3. Human Interaction in Service Delivery
4. New Technology and The Adoption of Virtual Service Require New Skill-Sets
5. Technology and Its Impact on Communication and Personalized Service
6. Social Media and Customer Service
7. Customer Service: The Way Forward
8. Summary and Recommendations
9. Conclusion

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