The Escalation Problem

(This is an edited version of a post that I wrote nearly 7 years ago. Reposting as part 1 of a two part article. The second one will be up soon.)

When I was back at Tata Communications, Shachin Bharadwaj, then founder of TastyKhana (and now co-founder of sminq) in Pune, sent me this Twitter message: 

This was in response to:

A few days later, I faced an almost similar situation. I was trying to buy some products urgently for my home and reached out to the relevant sales guys in Pune. For almost a week there was no response, in spite of several calls and messages. Finally, having run out of ideas, I called a friend who was a senior manager in that company. It was a Sunday morning and I knew that he was not responsible for this line of products, but I had no other option. Within an hour, the sales guy called me, asking for the details of my requirements.

I used to receive several "escalations" from customers and friends, even though I was not in a "line" role... (even today, I get queries if I can help get some Tata company issue resolved for them). I am sure those who are in business sales / marketing or customer service leadership roles are inundated with escalations. Why does this happen? Why is it that large organizations - usually - are often unable to handle sales or customer service issues at the operating level? Surely they realize that "escalations" are not good for them, not only from a reputation perspective but also from a cost point of view.

Corporates would argue that such escalations are few, relative to the overall number of transactions that they manage, and therefore, statistically insignificant. If you have a 100 million subscribers with 10 "transactions" each, even a 99.9% quality level would still leave a million "failed" transactions. The best businesses would have (or aspire to) lower failure rates, however, it is impossible even for them to achieve 100% out of their operations. 

Earlier, they could have gotten away with it. An individual (customer) had limited ability to influence others or have her voice heard. An aggrieved customer could write to the company's senior management or to a publication and hope that something would come out of it. Perhaps some would go to a consumer court. Things have changed today. One aggrieved customer (even if accounting for the fourth decimal of all transactions) can ruin a company's carefully crafted (usually at huge expense) image.

The only way to get it always right is if every member of the organization focuses on solving customer issues or preventing the creation of any issues. How often does that happen? I can think of three main reasons why issues do not get addressed at the operating / first level and lead to dissatisfaction, frustration and inevitably, escalation.

1. Lack (or Mismatch) of Incentives

What are the most popular metrics for customer service organizations? Call centre staff are usually measured on number of calls, hold time, etc. A telecom service engineer is measured on network uptime, capacity utilization, etc. Very rarely are they tasked to enable happy customers. Customer satisfaction indices become part of larger corporate imperatives and company performance scores. I have not seen too many companies that directly measure (and consequently, incentivize) customer satisfaction - satisfaction that is tracked at an individual transaction level and not at the aggregate in an annual or quarterly survey. 

Similarly, a sales person is tasked to maximize new sales or revenues; most companies have complex commission structures that encourage sales of certain products (or to certain segments) over others. A sales person inevitably follows the money. If you are not a "priority" customer segment or seeking a low-value product, the sales guy has no interest in you, period. In my case where the sales folks showed no interest in my order, I suspect that there was no (or very little) incentive for sales to a "group" employee, so why would a sales guy waste time on my order when there are other deals to pursue in the market?

2. Lack of Empowerment

What are you willing to do to solve a customer issue? Ask any senior manager and you will always hear the answer, "Anything, customer is king." Unfortunately, that message rarely reaches the line staff -- not from a communication perspective, mind you, but in terms of policies and delegations. Does the organization recognize and celebrate moments when difficult customer issues were resolved speedily? Were employees who went out of their way to solve the problem rewarded immediately? Or was the first reaction of the management to conduct a cost-benefit analysis of the event?

Empowerment is also in terms of information. Customers are, mostly, not irrational. They understand that things/systems/machines do fail. What they'd like to know is why, and more importantly, how/when will the issue be resolved. I have never seen a customer service executive that has been empowered with such information. In the absence of facts, the CSE responds with vague promises and a generic assurance of resolving the issue within 24 hours or 48. 

A few years ago, my broadband connection was down and every time I called, I was told the issue would be resolved "soon". A week later, the connection was still down and my blood pressure was up. After a few rounds of escalation, I learnt that some equipment had been damaged due to a short-circuit and that the new equipment was waiting for the electricity department's go ahead for reconnection. This permission was awaited and could take a few more days; the ISP could do nothing about it. Fine, but if only had I been informed earlier, I might have made other temporary arrangements for Internet connectivity without staring at the modem daily or shouting at the customer service staff. 

3. Lack of Learning from Mistakes

Each escalation is a moment of learning. Why did it not get addressed at the level it should have been? What was lacking? Senior executives that receive escalations focus on the immediate solution (as they must) but often fail to deep dive into the real problem. Whether it is a change in incentives or a process, or a reprimand in case of negligence, something must change after each deviation from the norm of operations.

It is also important that even after an escalation, the issue be addressed by the operating teams. That sends a message to the operating staff as well as to the customer: the escalation was an exception, the point of contact for the issues does not change. Escalation should not become a habit.

Of the three, I believe that wrong measurement/incentives is the most serious. Organization structures by business units, functions, regions, etc. and their corresponding incentive systems worsen the situation. Most employees in any organization do not think they are responsible for customers or customer "service". In a telecom company, network, operations and finance staff would constitute over two-thirds of the organization; how many of them are measured directly on customer related parameters? I am sure similar situations exist in financial services, travel, retail, etc. Are there examples of companies where customer-related metrics drive business performance and incentives?