Customer Satisfaction is not necessarily an Accurate Predictor of Loyalty
Rod Jones – Lonehill, Johannesburg. 12 September 2011

 For decade the call centre or contact centre professionals throughout the world have sweat proverbial blood in their quest for one of the most elusive of KPI’s; Customer Satisfaction.

Oh how we have tried to develop processes and systems and training interventions and incentive programmes all in the interests of pushing up the C-Sat index; how we have tried to ‘delight’ customers when all that they really want is simply to be given a satisfactory solution to their request or their service requirements.  And then came The Net Promoter Score™ or more recently, Net Promoter System ™ and the ‘new science’ of Customer Experience Management. But a white paper titled “Stop Trying to Delight Your Customers”¹ published by The Harvard Business Review in August 2010 has created a massive ‘tsunami-like’ wave of strategic re-thinking throughout many parts of the global marketing and customer service environment.

 Stop Trying to Delight Your Customers
In this landmark paper, co-authors Matthew Dixon, Karen Freeman and Nicholas Toman rattle the cage of conventional customer service wisdom by stating emphatically, “Stop Trying to Delight Your Customers”.  Indeed, based on a huge survey involving some 75,000 customers (including a significant sample of South African customers) who had interacted over the telephone with contact centre agents or through various self-service channels the authors were able to substantiate their hypothesis in three critical areas: How important is customer service to loyalty? Which customer service activities increase loyalty and which don’t?  And can companies increase loyalty without raising their customer service operating costs?  In a nut-shell, two fundamental findings emerged from the study that will no doubt affect many organization’s customer service strategies. First, delighting customers doesn’t build loyalty; reducing their effort – the work that they must do to get their issue resolved – does. Secondly, acting deliberately on this insight can help to dramatically improve customer service whilst reducing servicing costs and dramatically reducing customer churn.  

Many of the statistics and findings from the study are frightening in their consequences. On the other hand, to many it will come as one of those “Eureka Moments”; the breakthrough in real customer service strategy that our profession has needed since the advent of  CRM-thinking in the early 80s.  For example: of the 100 customer service executives interviewed in this survey, 89 stated that their primary service delivery strategy was to exceed customer expectations yet despite gargantuan investments in the quest to achieve this Herculean goal, 84% of their customers reported that THEIR expectations had definitely not been met.  And so the paradox continues … The study shows that over 20% of so-called “satisfied” customers have every intention of defecting yet 28% of the admitted “dissatisfied” customers actually intend to stay. Talk about a dichotomy !

 But let’s look again at the Dixon-Freeman-Toman premise:  They state- “When it comes to service, companies create loyal customers primarily by helping them solve their problems easily and quickly.” This fundamentally changes the overall emphasis of customer service interactions.  To build and capitalize on real customer loyalty, just make it easy for customers to interact with us. Reduce their effort and increase their loyalty and their propensity to spend more with us.

Take a look at some of the loyalty-eroding issues that the 75,000 sample report highlights; that typically lead to customer defections:  56% of customers report having to re-explain an issue. 57% report having to switch from the web to the phone.  59% report expending moderate to high effort to resolve an issue.  59% report being transferred.  And finally, 62% report having to repeatedly contact the company to resolve the same issue.  Sounds familiar, doesn’t it ?

 Introducing: The Customer Effort Score
In their quest to understand and to predict customer loyalty, the predictive power for repurchasing and the predictive power for increased spending, Dixon-Freeman and Toman evaluated and compared Customer Satisfaction (CSAT), Net Promoter Score (NPS) and their new metric, Customer Effort Score (CES).  The team’s finding clearly show that CES is infinitely the best metric to accurately predict customer’s behavior when it comes to loyalty and therefore, their future value to the company.

Read the full white paper
Since reading this short (7 pages) yet profound white paper in August 2010 I have worked with several clients implementing a raft of effort-reducing strategies and process changes and the initial results have been nothing short of dramatic. Not only does the CES method make incredibly good sense, it is also a practical route to process redesign and cost reduction. Early positive ‘knock-on effects’ include not only significantly increased customer satisfaction (OK, so we still measure C-SAT) but elevated levels of agent engagement, reduced stress and consequentially, reduced absenteeism and attrition.

 My strongest recommendation to any customer service executive is to download this landmark white paper from the following website  http://www.executiveboard.com/ccc-customer-effort/     (The download buttons are on the top right hand side of the home page)

 To end with a quotation from the white paper in question:

“To really win their loyalty, forget the bells and whistles and just solve their problems.” 

Rod Jones. Lonehill, Johannesburg. 12 September 2011 

¹ Source: “Stop Trying to Delight Your Customers” © 2010 Harvard Business School Publishing Corporation