Exceeding Customer Expectations is…the Wrong Goal?

August 12, 2020
4 Minutes
Made Not Found Text
In SaaS businesses, operating results are earned every single day; and good businesses are made, not found. Writing here about building organizations, learning from the experience, and appreciating the ride.

Tags

The key to customer loyalty is an effortless customer service experience.” These seemingly innocuous words caught me flat-footed and punched me right in the nose. I’d been focused for so long on trying to delight customers that the concept of effortlessness caught me completely off-guard.

Since being captivated by the book “Ravings Fans” decades ago, I’ve been an unhesitating proponent for striving always to exceed customer expectations. But a friend and successful entrepreneur recently initiated a conversation that has brought such longstanding beliefs into question. His perspective is informed by two Gartner articles (here and here) with supporting research that challenges the actual business impact of delighting customers…and points to (low) effort as being the strongest driver to customer loyalty. These articles and concepts caught my eye and are forcing a reexamination of some of my long-held beliefs. Below are highlights from those articles along with some accompanying thoughts and considerations.

Based on research done by CEB (2013) with 97,000 customers, the data revealed four major findings:

  1. The delight strategy doesn’t pay: As it turns out, delighted customers are no more loyal than those whose expectations were simply met — loyalty apparently plateaus once that threshold is reached. Second, it costs a lot of money to foster moments of delight for customers, which arguably makes doing so not worth it from a strictly financial perspective. And, finally, most businesses just aren’t great at creating these magic moments for customers. I’ll admit that all of these points square in the back of my head with decades of anecdotal experience.
  2. Satisfaction doesn’t predict loyalty very well: Data from the survey shows that a strong CSAT score is not a reliable predictor for whether customers will be loyal. Having implemented numerous CSAT and NPS initiatives, I know this to be true. But…I’ve also always viewed NPS as being (a) the best data we could get on customer intent, (b) useful in concert with other metrics, and (c)extremely helpful in terms of the qualitative light it shines on issues to address for various cohorts of clients. According to this study, there may be a more useful metric than NPS; more on that below.
  3. Customer service interactions drive more disloyalty than loyalty: This one was a head-turner: the research shows that a customer who requires a service interaction is four times more likely to drive disloyalty than to drive loyalty. Does this mean that the best we can hope for is to not create “raving detractors?” Maybe not…
  4. The key to mitigating disloyalty is to reduce customer effort: The bottom line is that customers hate it when they have to exert a lot of effort to solve their issue (think: calling the help-desk multiple times, having to repeat personal information to multiple service reps, getting transferred or put on hold interminably). Reducing that effort — NOT creating moments of delight — avoids disloyalty, keeps customer happy, and increases loyalty.

The article goes on to offer interesting principles of low-effort service. But the truly mind-blowing part comes in a related article that encourages companies to create effortless customer service experiences (and discourages striving to create loyal customers through exceptional customer experiences). By offering statistics on the outcome of low-effort versus high-effort experiences, the following infographic makes this case in a truly compelling manner:

Source: Gartner, Inc. (2019)

The takeaway from all of this, according to Gartner’s analysis, is that “customer effort is 40% more accurate at predicting customer loyalty as opposed to customer satisfaction.” Unsurprisingly, Gartner also introduces a metric, the Gartner Customer Effort Score, in order to measure the ease of customer interaction and resolution during a request for help.

Source: Gartner, Inc. (2020)

To determine the score, simply calculate the percentage of customers that at least “somewhat agree” (those who give a 5 or above) that the company made it easy to resolve their issue. Seems straightforward enough in its implementation, analysis, and execution of steps to address the findings.

This all resonates with my anecdotal on-ground experience; and my takeaway from all of the above is that customer effort simply can’t be ignored. And, since the CES appears to be a metric that is easy enough to spin-up without any notable disruption to the overall client experience, there is every reason to give it a trial-run. Although I’m not quite ready to completely ditch more traditional CSAT metrics like NPS and WOMI, we certainly intend to test out CES and report-back the findings. After all, getting punched in the nose once is enough to create a desire to learn from the experience.

SHARE

Are we speaking the same language? Let’s talk.

L8 icon
379 W. Broadway
New York, NY 10012

Contact
©2022 Lock 8 Partners 
|
Privacy Policy
chevron-down