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The Corporate Executive Board

Quality Insider

Study: Reducing Customer Effort Is Key to Managing Loyalty

When reducing costs and improving customer experience, “delight” doesn’t pay

Published: Tuesday, June 29, 2010 - 12:42

(CEB: Arlington, VA) -- The Corporate Executive Board (CEB) has challenged conventional customer-service wisdom by revealing that it doesn’t pay to delight a customer. After years of focus on the “above and beyond” service mentality, research from the Customer Contact Council, a division of CEB, indicates that most customers seek only a satisfactory solution to an issue, and that companies are artificially raising expectations in their efforts to oversatisfy them. The research also suggests, and CEB advises, that reducing the level of effort a customer exerts in the service channel is a more effective and lucrative path to customer loyalty.

In fact, 96 percent of customers who put forth high effort to resolve their issues are more disloyal—an eye-opening number when companies consider that 59 percent of customers report moderate-to-high perceived additional effort in a service interaction. The CEB’s research found that, in aggregate, customer service interactions are nearly four times more likely to lead to disloyalty than loyalty. For companies seeking to mitigate disloyalty, reducing customer effort—not delighting the customer—is the greatest lever the contact center can pull.

“Everyone is talking about loyalty—how to build it, what it means, and how to monetize it—but many companies are operating under a false pretence,” says  Matt Dixon, managing director of CEB. “There’s lots of uncertainty out there, and we wanted to help our members sift through what really matters in customer service. What we found was surprising and really challenged conventional wisdom. Now, when customers ask us how to best delight their customers, we say don’t—reduce their effort instead.”

The customer effort score and customer effort audit

To help members assess and reduce the amount of effort their customers were exerting in the service experience and ultimately enhance customer loyalty, CEB developed the customer effort score. Rather than a complex algorithm, the customer effort score is a simple question that service operations can use as a loyalty indicator in the service channel: “How much effort did you personally have to put forth to handle your request?”

The difference between the customer effort score and other well-established metrics such as Customer Satisfaction (CSAT) or net promoter score (NPS) is that it operates effectively on the transactional level and better captures the disloyalty effect of service interactions. CEB’s research showed that the customer effort score out-performed both NPS and CSAT in predicting the loyalty effect of an individual service interaction.

“We like the customer effort score in the transactional customer-service environment because it gives a more immediate and actionable measure,” Dixon adds. “But this is not a new ‘ultimate question.’ We believe that other metrics, particularly NPS, are excellent indicators at the company level, but they don’t measure individual service interaction impact or really get to disloyalty in the way the customer effort score does. The key take-away here is to build loyalty. Companies need to stop thinking ‘exceed expectations’ and start thinking ‘make it easy.’”

Companies that want greater insight into the kind of effort they are imposing on their customers—and what they can do to reduce it—can download and complete the customer effort audit.

In addition to providing insight into how best to reduce customer effort, the research findings encapsulated in “Shifting the Loyalty Curve: Mitigating Disloyalty by Reducing Customer Effort” can help service-oriented companies:

• Understand the drivers of customer loyalty and disloyalty

• Provide greater clarity around front-line orientation

• Head off large, “delight oriented” investments and direct resources to higher return projects

 

Methodology

To arrive at the findings, The CEB conducted extensive qualitative analysis to determine key loyalty drivers in the service channel and surveyed a sample of nearly 75,000 customers globally across multiple industries.

For more information on how to reduce customer effort and build loyalty or to complete the customer effort audit, visit www.executiveboard.com/ccc-customer-effort. To learn about the Customer Contact Council, visit https://ccc.executiveboard.com/Public/Default.aspx.

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The Corporate Executive Board

The Corporate Executive Board Co. drives faster, more effective decision making among the world’s leading executives and business professionals. As a premier, network-based knowledge resource, it provides executives with the authoritative and timely guidance needed to excel in their roles, take decisive action and improve company performance. Powered by a member network that spans more than 50 countries and represents more than 85 percent of the Fortune 500, The Corporate Executive Board offers unique research insights along with an integrated suite of members-only tools and resources that enable the world’s most successful organizations to deliver superior business outcomes.