Can American Express Lead the Charge in Service?

Customer Service
Customer Service

In early June American Express CEO Kenneth I. Chenault held a global town hall meeting with the company's employees. When they tuned in to the videocast, however, they didn't hear an earnings report, as might be expected from the head of a brand with $27.7 billion in revenues. Instead, the message from Chenault was about achieving the company's core goal: to be the number one-and most respected-service brand in the world. And to become number one, Chenault stressed, customer service must be everyone's job, not just that of frontline customer care professionals.

Chenault is serious about this impressive aim. So serious, in fact, that the head of customer service is leading a cultural transformation to increase its customer satisfaction scores by 2009. The transformation, which American Express leadership hopes will result in the firm surpassing service leaders Ritz-Carlton, FedEx, and USAA, must take into account a workforce numbering close to 68,000 and one billion annual customer touches across myriad channels. These factors only heighten an already immense challenge to deliver consistently exceptional service.

American Express is relying on carefully analyzed numbers that its executives think will help mark its level of respectability. The numbers are a combination of the company's version of Net Promoter Score, which American Express calls Recommend to a Friend and has been using since 1999, and overall feedback from the company's voice of the customer (VOC) initiative. VOC serves as the foundation for its customer-centric processes by actively collecting general feedback from customers across the enterprise.

Here's how the number is calculated: After a phone or email contact, a customer receives a five-question survey, which includes inquiries about whether he was satisfied with the interaction, how many contacts it took to resolve the issue, and if would he recommend American Express to a friend or colleague. The company combines these scores with organizationwide satisfaction scores based on VOC feedback. The resulting total score is the number American Express uses to gauge its quality of service. (The company declines to disclose the current number.)

The firm recently determined that if the number doubles by next year it will elevate American Express to the most respected service brand in the world based on publicized Net Promoter Scores.

The magic number
All American Express employees, especially the customer care professionals, are compensated on delivering a customer experience that will help to increase the number. Everyone is graded and then compensated on the overall score, including top executives. Rosa Sabater, senior vice president of customer experience, says that 50 percent of her total compensation is tied to this and that 20 percent of agents' incentives are linked to it. The score ensures that the entire organization is working toward the common goal of delivering exceptional service. "I sink or swim based on what the customer thinks of my service," Sabater says. "Literally, how we're paid is based on feedback."

Sabater oversees a centralized team that pores over VOC data every day. The team is charged with such responsibilities as responding to customer complaints; ensuring that employees are doing whatever it takes to resolve negative interactions; delivering feedback to the marketing team; reporting agent ratings to management; and asking How can we make this right? when something goes wrong. "That's one of the things I learned from the best-in-the-world providers; Everyone puts the voice of the customer at the center, but everyone also acknowledges lapses in service. You have to fix [them]," she says.

For American Express, maintaining that level of customer focus means grading the customer care professionals daily on their performance. Recommend to a Friend ties how customers answer the survey questions to the interaction they experienced. Managers use call playbacks and customers' remarks and agents' scores from individual interactions with those customers, part of their coaching sessions. Service professionals can also explore the "wow call library" as a resource if they're experiencing difficulty with a certain type of call. "It's more important to paint a picture of what extraordinary service is than to paint defects," Sabater says.

Leanna Rude agrees. As a customer care professional in the company's Arizona contact center, she says that seeing customers' comments every day and hearing what customers say about their experience on the phone with her is "a great way to see what I need do. I think that's important, so we don't go a week or two without knowing our progress. How can we become the world's most respected service brand if they don't hold employees to a higher standard?"

One way the company enforces daily reviews is through recently introduced community coaching. According to Tammy Weinbaum, vice president of merchant services, the company has assigned team leaders who each coach 15 customer care professionals. (American Express declines to disclose how many customer care professionals it employs). For several hours every week, leaders listen to calls and reinforce with the agents how important each interaction is, and then tie customer scores from the surveys to rewards. Rewards include a special recognition bonus based on call scores. "It goes a long way and means so much," Weinbaum says. Additionally, she says, many vice presidents and directors visit the contact centers and personally hand customer care professionals monetary bonuses (along with Payday candy bars) in recognition of unique customer care resolutions. "Monetary bonuses go a long way, but it's important to thank them too," Weinbaum says.

Recognition and rewards also help motivate agents to think creatively about getting customers' situations resolved. Rude cites an incident in 2007 in which a cardholder called to report fraud on her account. Rude contacted the fraud supervisors at the customers' bank and worked with them for a week to get the account reinstated. Because of her dedication and the time she spent resolving incident, Rude won an all-expense-paid trip to New York to attend the annual, global customer service award ceremony. "With each card we handle, our customers have a different need or concern," Rude says. "We recognize the problem and solve it no matter what it is."

American Express to also motivates frontline employees by offering career development opportunities based on a framework that combines excellence in service delivery and training designed to help employees' growth within the organization. "We provide more structure and give them the ability to move into more roles," Weinbaum says. "We now have a model that can be used to [provide] a truly meaningful career in a service organization."

Weinbaum, who started working at American Express 18 years ago as a clerk, has witnessed a lot of changes, but says that service has always stayed at the center of the brand. In recent years there's been a greater emphasis placed on delivering consistently outstanding service. "Service is the core of our brand," she says. "We're not changing our focus, we're just finding ways to do it better."

Listening and learning
That increased emphasis includes carefully researching and watching how best-in-class companies operate. American Express executives began meeting individually three years ago with their counterparts at the companies they strive to emulate, such as Starbucks and FedEx; the meetings continue on an ad-hoc basis. "We sawwhether it was the [FedEx] Purple Promise or [our own] Customer Care Principles, everyone started with a statement of what they wanted from the company and where they wanted to go from there," Weinbaum says.

Executives even visited top-notch service companies that customers called attention to. Sabater spent a day at the Hudson Street Post Office in New York City listening to and learning from customers and employees after an American Express customer raved about the service at the post office to an American Express customer care representative. "At the end of the day, we did a lot of research with customers," Sabater says. "We spend an inordinate amount of time focused on people."

The outcome was its Customer Care Principles (see box below), which American Express developed as the foundation for its new customer strategy and VOC initiative. The principles remind employees continuously about how they should treat customers (employees carry the principles on their person like the employees at the Ritz-Carlton). "We are committed to doing what's right by customers.... If we do that we are actually going to increase market leadership," Sabater says. "When we stick to the principles in trying times, customers will appreciate it."

The company reinforces the principles and the overall message-to be the most respected brand that delivers service-by reiterating them in meetings and printing them on internal company materials. This comes down to using a common language when they're talking about VOC, no matter what line of business an employee is in. It also means that there are consistent ways to act on customer input and to measure it. "It reinforces the message that everyone owns the customer, no matter what role they're in," she says.

Rude says this reinforcement results in a seamless working environment where everyone operates uniformly in how they treat customers. "If we call another department, we get the same respect and give that same respect," she says. "We do a lot of teamwork."

Confidence soars
Commitment to VOC produced record growth for American Express last year. Worldwide spending by American Express cardholders increased 15 percent to $647 billion. Most competitors reported only single-digit increases in 2007. Return on equity reached 37 percent and card member loans rose 22 percent. During the year the company added 8.5 million new cards, bringing the total to 86.4 million. Along with its intense customer focus, American Express achieved these numbers by increasing spending in marketing, promotions, rewards, and card member services by 20 percent.

According to Sabater, employee confidence levels and retention rates have also increased. One reason is that employees now have a clear picture of how they contribute to American Express's efforts to become best in class.

In early May she visited the customer care professionals in the company's Greensboro, N.C., contact center. Sabator repeated to them why customer service is so important to the company: American Express is held to a higher standard. "The challenge," she says, "is that when [customers] see us, they expect more from us."