Customer Delight does not equal Customer Loyalty


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The Challenger Sale author Matt Dixon, is my guest next week on the Business901 Podcast, and though I could not resist talking about The Challenger Sale: Taking Control of the Customer Conversation, the discussion eventually got around to his new book The Effortless Experience: Conquering the New Battleground for Customer Loyalty. I like to think of Matt as a myth buster. Read the excerpt below and see why…

Matt Dixon Excerpt

A lot of people out there love the Challenger book and so a lot people are asking, “How do I reconcile these two pieces of research or put them together?” You know truthfully they’re different studies though I think there is a very interesting and powerful connection between the pieces that we could talk about. But really the genesis of the Effortless Experience work was back in 2007, 2008. One hat I wear at our company is I run the membership in the group that serves heads of sales I mentioned before where the challenger research came from. The other hat I wear is I run the program for heads of customer service and customer contact. So these are the folks who are running, in many cases, very large scale contact center operations that’s, unfortunately for a lot of the people, we love to hate as consumers. I’m subject to many cocktail party conversations where people will lay out all their dirty laundry and all the ways they’ve been wronged by call center reps in the past and by companies. The root of that research was back in 2008 we had picked up a study for that membership.

We worked with about 400 heads of customer service around the world. The thing they really wanted to know, because a lot of these folks were getting pressure from their CEO’s that as their products and their brand and their value propositions become very commoditized out there a lot of these heads of customer service were coming back and saying, “The CEO or the CMO is really looking for us to use customer service as a way to differentiate who we are as a company and to generate loyalty.” So what can we do in customer service to deliver that really loyalty-building customer service experience? As we got into it we found something pretty surprising information. Just like in Challenger where we found these five types of reps; the one who wins is not the one we thought was going to win, and it led to lots of questions.

In the customer service world, when you think about this question of how to deliver a service experience that drives loyalty and you ask any head of customer service or any senior executive in any company, what they’ll tell you is the way to the customer’s heart, the way to build loyalty is by not just meeting their expectations but by going above and beyond as people in the call center world or the service world call this the “moment of wow” or the “delight moment” exceeding the customers’ expectations. When we dig into it what we actually found, across about 125,000 customers globally, we found that those customers whose expectations were exceeded were only marginally more loyal than those whose expectations were simply met. What you find is that it cost companies a lot of money to delight customers. Often times, it’s denoted in refunds and givebacks and breaking policy and giving things away for free, and it costs companies a ton of money. When you look at it, you realize that customers don’t pay you back with their loyalty.

As we dug into it we found even more surprisingly, is that most customer service interactions are actually four times more likely to make customers disloyal than to make them loyal. In other words, when you think of loyalty, customer service is kind of like the defensive of loyalty. There’s an offense and the offense is played by product, it’s played by brand and reputation and things like that, but the defense is really owned by customer service. This is where you’re trying to fill up this bucket of goodwill, of loyalty for your company and in customer service we kind of drill the hole in the bottom and all that goodwill is pouring out. When we look at what it is that customer service does to create so much disloyalty, what we find is it all boils down to this idea of customer effort. Customer effort is really the amount of work that companies force their customers to go through to get their problems fixed. It’s a lot of the culprits that many people in customer service have tried to get after for years – things like when customers have to call back repeatedly or contact a company repeatedly to get an issue fixed.

When they have to switch channels, so they go to the website, they are confused by what they see or maybe the answer to their question isn’t there, so they have to pick up the phone and call. When you call in, and you get transferred around and you get the feeling that people are passing the buck, “Oh it’s not us. You gotta talk to those people over in that department,” and things like that, repeating information and that runs the gamut from having to tell your story over and over again. Even to the simple stuff like having to repeat your account number after you just typed it into the touchpad.

When we look at these things, and we actually sum it all up as I said before, we give it this term of customer effort and that big disloyalty effect that customer service tends to have really does boil down to the level of customer effort that you force your customers to go through, the level of effort you make them go through to get their problems fixed. The takeaway here is that the real role for customer service in companies is not to try to create loyal customers by delighting them but rather to mitigate disloyalty, create fewer disloyal customers by making things easy for them. That’s a real mind shift for heads of customer service. Just like Challenger is for heads of sales, it gives customer service leaders who’ve grown up in a world of delight and exceeding the expectations really celebrate, and it’s rewarding, and it’s steeped in the culture of every single call center in the world.

You or I may beg to disagree based on our personal experiences with call centers. But believe it or not if you ever go to visit one you’d see bulletin boards with letters and emails from really excited and happy customers praising the rep for going above and beyond and going the extra mile and wowing them in the moment. But when you look at it in its entirety what you find is again companies don’t get paid back for that and really what they’re doing in customer service is drilling that hole in the bottom of the loyalty bucket, and the book is really about how do you plug that hole and how do you stop letting your good loyalty kind of drain out the bottom through bad customer service interactions. “

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Republished with author's permission from original post.

Joseph Dager
Business901 is a firm specializing in bringing the continuous improvement process to the sales and marketing arena. He has authored the books the Lean Marketing House, Marketing with A3 and Marketing with PDCA. The Business901 Blog and Podcast includes many leading edge thinkers and has been featured numerous times for its contributions to the Bloomberg's Business Week Exchange.


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