Rethinking Customer Loyalty
Given growing product commoditization and diminishing brand differentiation, building customer loyalty through strong customer service interactions is becoming increasingly vital for companies. In light of this change, companies should re-evaluate their long-held beliefs about the role of customer service in increasing loyalty. Six myths about customer loyalty are dispelled here, with some advice on what companies should focus on within the service organization to drive customer loyalty.
Myth 1 Customer service interactions should strive to `delight' MYTH the customer
v Companies grossly overestimate the value of exceeding customer expectations. v The actual difference in customer loyalty between meeting and exceeding customer expectations during service interactions is marginal at best. Customers whose expectations are exceeded are no more loyal than customers whose expectations are met.
v Companies should focus their customer service strategies on simply “meeting“ customer expectations and divert resources away from costly customer “delight“ programmes and giveaways. Instead, companies need to change focus from “delighting“ customers to “making it easy“ for them in service interactions, as “effort“ is the best predictor of loyalty. In fact, 96% of customers with high-effort experiences are more disloyal, while only 9% with low-effort experiences are more disloyal.
Myth 2 Highly satisfied customers will be more loyal
v A more satisfied customer is not necessarily a more loyal customer. In fact, there are satisfied customers who defect from companies, while many dissatisfied customers stay on.
v Satisfaction and loyalty are poorly correlated with each other. Research shows that 20% of satisfied customers intend to leave a company while 28% of dissatisfied customers intend to stay with the company. Instead of optimizing to higher customer satisfaction (CSAT) scores, measuring customer effort is a much more accurate predictor of customer loyalty.
v De-emphasize CSAT metrics in strategic decision making and, at most, only continue to benchmark it for internal or regulatory reasons. Instead, consistently track and reduce customer effort, i.e., the amount of effort put in by a customer to resolve an issue. Effort can be in the form of repeat calls, call transfers, channel switching, policies, etc. CEB has established a new metric, the Customer Effort Score (CES), which measures customer effort.
Myth 3 First Contact Resolution (FCR) is a great way to gauge whether
v We are making service `easy' for customers FCR is insufficient to fully gauge a company's issue resolution performance. FCR does not capture related downstream issues that typically go unnoticed by the customer at the time of initial contact. These issues cause customer callbacks and increased customer effort.v A customer service request contains both stated and unstated customer needs. While the customer-stated issue is resolved through effective processes, policies and frontline representative development, there are other unarticulated needs that trigger repeat calls. CEB found that 22% of repeat calls involve downstream issues related to the initial call, even if FCR was achieved. Create processes to pre-empt downstream, related issues and resolve them during the first contact.
v Leading companies strategically integrate techniques and provide representatives with frameworks to anticipate and forward resolve related issues that happen with high frequency and can be explained over the phone.
Myth 4 Customers want to talk to companies
v While companies have organized themselves to address customer issues primarily through live phone channels, research shows that customers increasingly prefer to use self-service.
v Globally, customers are found to value self-service channels just as much as they value the live phone channel. Customers are increasingly turning to self-service channels first to handle their request. There is even considerable preference for Web self-service among older customers and those with urgent issues. v Instead of optimizing the phone experience, companies should make it easy for customers to fully resolve their issues on the Web by improving the functionality of their existing self-service channels. Leading companies do not invest in new flashy tools or the latest Web design; rather, they focus on the basics to make their websites easy to use.
Myth 5 Customers need to be educated and persuaded to try self-service
v Customers already know about and are visiting self-service channels; however, the real challenge is to get customers to “stick“ in them to fully resolve an issue without switching to another channel.
v More often than not, customers begin issue resolution by going to the company website. CEB data shows that 57.7% of callers used the company website before calling customer service and 34.4% of callers were actually on the Web simultaneously while they were on the phone. In many cases, the information was on the website but the customer couldn't find it, didn't understand it or was only looking for the contact information. v Instead of investing in customer Web education and migration efforts, ensure that customers fully resolve their issues on the website. This is a huge opportunity for companies to both decrease costs and drive customer loyalty. Research shows that companies can make their websites “stickier“ by making the information (e.g., FAQs, knowledge bases) consumable and by actively guiding customers to the best-fit information for their needs and preferences.
Myth 6 Customers want a consistent service experience
v While customers want consistent information from the service organization, consistency in how that information is delivered leads to an emotional disconnect with customers during interactions. Companies must tailor conversations to individual customer preferences to ensure a good customer experience.v Customers have different personalities and issue-resolution preferences. In a CEB study, 24% of repeat calls stemmed from emotional disconnects between customers and customer service representatives.
(Source - mintlive)