… Also Meeting Basic Service Expectations
That’s my rebuttal to the 2010 HBR article Stop Trying to Delight Your Customers, by Matthew Dixon, Karen Freeman, and Nicholas Toman of the Corporate Executive Board (CEB).
Provocative headline, but if taken literally is profoundly wrong.
Let’s start with what the CEB study got right. If your customers are calling to get a problem solved, satisfying that request quickly and easily is very important. If you don’t, customers will be dissatisfied, and that leads to defection and negative WOM.
But the authors take that point and extrapolate too far, implying that:
- Customer service transactions are the only opportunity to create true loyalty.
- Placating customers after a failure is the same as creating delight.
- Companies should adopt Customer Effort Score (CES) as a general purpose loyalty metric.
Satisfiers vs. delighters
It’s true that overachieving on basic customer service (or other “hygiene” expectations) is usually a waste of company resources; it doesn’t move the needle to create positive customer loyalty. This insight is hardly new, it is based on the Kano model and other related research on drivers of satisfaction and loyalty.
Here are a few examples to illustrate my point:
- If you go to a bank to use the ATM and it doesn’t work, you’ll be unhappy and more likely to switch banks if it keeps occurring. Is it worth trying to delight a customer when they just want to withdraw cash and be on their way? Probably not. Although I think banks could make more creative use of the ATM experience, like Ogaki Kyoritsu Bank in Japan which runs a game of chance.
- When you stay at a hotel, you expect your room to be clean. What if the hotel made it so clean you could use it for surgical procedures? Again, a waste of resources. A clean room is enough, the hotel should focus its resources on other areas to delight you. Like DoubleTree, which gives away 60,000 chocolate chip cookies every day.
- And then there’s the contact center, which is the focus of the CEB study. Does trying to delight the customer in basic service interactions pay off in positive loyalty? Again, probably not for the average company struggling to get the basics right. But Zappos has demonstrated that with the right people, customer service calls can still be a loyalty-building experience.
Delighting or placating customers?
The study implies that “delight” means exceeding expectations, and I’m fine with that personally. But delight is a bit like art; we all know it when we feel it. However, it’s not so simple to translate delight into a business practice.
For example, some might say delight is the same as very high levels of satisfaction. Or, getting a “9” or “10” on that NPS question, “How likely are you to recommend…?”
Taken literally, delight is a combination of surprise and joy. So to create delight with the customer, you need to do more than what’s expected. Getting a “totally satisfied” or “very likely to recommend” rating is not the same as exceeding expectations, according to Howard Lax, VP of Consulting at GfK Customer Loyalty.
The CEB study found that 89 of 100 customer service heads wanted to exceed customer expectations, with extras like “offering a refund, a free product, or a free service such as expedited shipping.” Yet 84% of customers didn’t feel their expectations were exceeded. As a result: customers were “only marginally more loyal than simply meeting their needs.”
In my view, these are examples of placating customers, not delighting them. Consumers get offered extras when the company has screwed up. Personally, I don’t want to make customer service calls, but if I have to, I want my problem solved pronto. Any extras aren’t really “exceeding my expectations,” they are making up for the fact that my expectations weren’t met.
If you don’t exceed expectations (as customers perceive it), you’re not actually delighting customers, are you? And therefore, it’s hardly surprising that there’s little loyalty impact.
What really drives loyalty?
The CEB study authors start with service interactions then extrapolate to create a new loyalty metric called Customer Effort Score (CES). That’s completely backwards.
Let’s remember that service interactions with the contact center are just one part of the total customer experience. Other experiences (e.g. in marketing, selling and purchasing) also matter. As does the quality, usability and “fit” of the core product/service. In my article What Really Drives Customer Loyalty? It’s Not Just About the Experience!, I advise companies to do the research to find both drivers of dissatisfaction (if you don’t meet expectations) and delight (when you exceed expectations).
In the Ipsos Loyalty white paper The Role of Customer Delight in Achieving Loyalty, by Timothy L. Keiningham, Douglas R. Pruden, and Terry G. Vavra, you’ll find a great discussion of the role of alleviating pain vs. creating true delight. In the chart below, notice that that clear communications and solving problems in one call/visit are both of high importance on “curing pain,” yet have low impact on creating delight. Providing the “right amount of information and assistance” has the opposite effect.
Source: Ipsos Loyalty
Similarly, GfK Customer Loyalty found in a 2011 retail banking study that “knows your history” is a driver of dissatisfaction but not a loyalty driver. In other words, it’s a “hygiene” expectation—a bank gets no credit for knowing its customers’ history, only blame when it doesn’t. But, “appreciates your business” can drive both dissatisfaction and loyalty. And, “helps you be smart about money” is not a basic expectation, so it’s a great opportunity for banks to delight customers. There’s no downside if they don’t (yet).
Commenting on the CEB study, Howard Lax of GfK Customer Loyalty says:
Making things ‘easy’ isn’t the same as instilling loyalty. Their point seems to be to forget about loyalty, just reduce the barriers to doing business with your firm. I don’t think this is enough to create stickiness; it just seems to (partially) address the problem side of the equation. Basically, they treat everything as a ‘hygiene’ factor. This might make sense when thinking about sending out statements (not much opportunity to WOW folks there), but seems to miss the larger point.
Matt Dixon says in a comment that the problem is that “companies focus their customer service strategies and resources on exceeding expectations (providing those moments of “wow”) when they struggle to simply meet expectations a huge percentage of the time.” The majority of customers (roughly 6 out of 10) experience frustrations during routine service interactions, such “callbacks, repeating information, transfers, channel switching, etc.”
Dixon is absolutely right—this is the sand in the gears of the service experience that should be removed. In fact, in my own US consumer study I found that “touchpoint amnesia” (the company forgetting customer information from one touchpoint to the next) had a dramatic negative impact on customer loyalty (NPS) and purchase propensity. That is just one example of a core service experience problem that should be fixed.
Strive for real delight, not appeasement
If you really understand what the CEB study found, the headline should read as “Stop Placating Your Customers, Get It Right the First Time.” Bill Price, author of The Best Service is No Service, pioneered a rigorous approach at Amazon.com to finding and fixing the reasons that customers needed service. While Amazon.com made accommodations for customers when it failed to meet expectations, it was (and still is) obsessed with figuring out how to stop making the same mistakes!
Some of the flack Dixon et al have received is deserved. The article title is misleadingly broad, and the CES loyalty metric seems contrived to measure just one element of the customer experience. But their message to focus on “blocking and tackling” is important, especially in customer service experiences.
My take is that companies need to work on two fronts continuously:
- Systematically root out the causes of customer pain. This will reduce dissatisfaction and defection, a worthwhile goal in most any business.
- Figure out how to truly delight customers on things that matter. At least, if you aspire to be a company that leads your industry.
To wrap up, delight is in fact a critical strategy to differentiate and build real customer loyalty. Just be sure to invest in areas where it will pay off. In the meantime, stop making mistakes that annoy your customers.
Further reading: “Don’t Bother Wowing Your Customers” – Really? (Howard Lax)