Customer Service in a Shrinking Economy

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Smart players have learned from previous downturns. Companies used to go after customer reps with the same blunt ax used elsewhere. Now managers are starting to understand the long-term damage created by such moves, from eroded market share to diminished brand value. The International Customer Management Institute, a call center consultant, has done studies that show eliminating just four reps in a call center of about three dozen agents can increase the number of customers put on hold for four minutes from zero to 80.

A better strategy is to get more out of the people you have. USAA, the insurance and financial services giant that caters to military families and ranks at No. 2 on our list, started cross-training its call center reps in 2007. Some 60% of the agents who answer investment queries can now respond to insurance-related calls. Not only did such training curb call transfers between agents, which drive up the cost of running a call center, but it also improved productivity. Even with Hurricane Ike and the stock market's financial crisis prompting a flood of calls to USAA's contact centers last year, the cross-training meant the company didn't have to expand its call center staff. Existing reps are more empowered to deal with customers, even if they may also have to do more work. No. 25 JW Marriott (MAR) is training administrative assistants to step in as banquet servers when needed. And in November, brokerage Charles Schwab (SCHW), No. 21 on our ranking, launched a "Flex Force" team of employees such as finance specialists and marketing managers at its San Francisco headquarters to handle calls on days of, say, rapid market fluctuations.

For those that slash costs, the challenge is keeping customers from noticing. Putting call center reps under one roof, for example, can eventually save as much as 35%, says Scott Casson, director of technology services at consultant Customer Operations Performance Center. On Feb. 12, USAA announced it will combine its six call centers into four; companies such as No. 11 KeyBank (KEY) and Ace Hardware, No. 10, have also consolidated operations in the past year. Ace plowed the savings from that move into longer evening and weekend hours for customer calls. "During tough times there are plenty of other pressures customers face," says Ace Vice-President John Venhuizen. "We don't want a customer service issue to be what makes them blow their cork."

PLEASING REPEAT BUYERS

Hoteliers also are trying to trim in ways customers are unlikely to detect. They're increasingly combining purchasing power to get better deals across properties that are within the same chain but may have different owners. Some hotels in the Four Seasons (FSH) chain, No. 12, are joining up to buy goods and services such as coffee, valet parking agreements, and overnight cleaning contracts that each hotel once bought on its own. JW Marriott hotels are teaming up to buy landscaping services that would be costlier if contracted for separately. The Ritz-Carlton, No. 5, is doing laundry at night to save electricity and replacing fresh flowers at posh properties with potted plants. With occupancy rates falling, notes Ritz COO Simon F. Cooper, "you have to get better because you're forced to."

As the game changes from acquiring new customers to keeping old ones, companies are shifting more resources to their steady patrons. They're the ones who pay the bills. And while first-time guests may not miss the absence of fresh flowers, repeat customers probably will. "It's the little things that often got you in the crook of those loyal customers' arms," says Jeanne Bliss, a former Lands' End (SHLD) service chief who now coaches customer service execs. That has led to a renewed emphasis on "tiering"—routing elite-level customers to better agents, nicer surroundings, or faster service.