Should you stop trying to “exceed customer expectations”?

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According to a recent customer satisfaction study reported in this month’s the Harvard Business Review; the answer is probably “yes.”

The idea that companies must “delight” their customers or “exceed customer expectations” has become so entrenched in business lore that it is rarely questioned. According to conventional wisdom, customers are more loyal to companies that go ‘above and beyond’.

In the Harvard Business Review article, “Stop Trying to Delight Your Customers,” by Dixon et al., the authors reveal new research that shows “exceeding customer expectations” – perhaps by offering a refund, a free product or free service such as expedited shipping – has a marginal impact on customer loyalty compared to meeting the customers’ needs and expectations.

The article is based on a multi-country study conducted by the Customer Contact Council, a division of the Corporate Executive Board, over a three year period. More than 75,000 B2B and B2C customers were surveyed regarding their customer service experiences and the impact of the experience on their loyalty. Customers interviewed had interacted with contact-centre representatives by phone or through self-serve channels such as web chat, interactive voice response and email.

The objective of the study was to evaluate the impact of customer service efforts to “delight” the customer on the customer’s “loyalty”. “Loyalty” was defined as customers’ intention to continue doing business with a company, increasing their spending or saying good things about it (or refrain from saying bad things).

The study showed that when customers reported a “very low effort” was required to have their problem or issue resolved:

  • 94% intended to repurchase
  • 88% said they would increase their spending

When the effort to resolve the problem was considered by the customer to be “very high”:

  • 81% intended to spread negative word of mouth

The best way to increase customer loyalty is through “making it easy” for customers to interact with customer service to get questions and problems resolved.

What does it mean to “make it easy” for customers? The study found three key factors, that result in the customer having to expend extra effort/work hard to get their problem or question resolved and have a negative impact on customer loyalty:

  1. Having to place multiple calls to address the same issue
  2. Having to repeat the same information to multiple contact points
  3. Having to switch from one service channel to another (e.g., having to phone after trying unsuccessfully to resolve the issue through the website)

The study also identified several key strategies for companies to use to address these issues. For example, through cluster analysis, the study revealed groups or clusters of problems that occurred together or in sequence, requiring the customer to call again. By equipping the customer service personnel with the tools to “head off” the next problem, companies can eliminate the need for multiple calls. Another example is through training customer service representatives to deal with the emotional side of customer interactions (e.g., frustrated customers).

To read the full article, click on the link below.

Dixon, M., Freeman, K. & Toman, N. “Stop Trying to Delight Your Customers,” Harvard Business Review, Jul-Aug 2010. Web. 08 July 2010.

Does your company “make it easy” for customers to get their questions and problems resolved? What are the most frequent, and the most thorny problems your customers experience? How can you improve the problem resolution process?

Republished with author's permission from original post.

Anne Miner
Anne Miner, the founding partner of The Dunvegan Group, first entered the field of marketing and survey research in 1974. Since then, she has been the lead consultant on assignments across virtually all product and service categories, from diapers to transportation. Anne is respected for her ability to work closely with her clients' teams to identify the issues to be investigated, focus on what is actionable and develop creative solutions.

8 COMMENTS

  1. Anne,

    That’s a strong headline. STOP trying to exceed expectations.

    A few thoughts:

    – I’m assuming that you mean that the real purpose of a business is doing the right things initially to satisfy the customer and meet expectations. I agree that there is no substitute to delivering the core benefits of your product or service. Giving that little unexpected extra doesn’t move the needle if you are not getting the basics right. It would be like trying to put a small band-aid on a gaping wound. You need to get the core offering correct. You can’t make chicken salad out chicken sh*t.

    – There are two sides to customer experience in my opinion. Value and Maintenance with the goal of being seen as high value and low maintenance. Let me explain:

    Value – What are tangible and intangible benefits that your service or product provides? (Note: Price factors into value, but only as it relates to the level of benefits and how effective the product or service is.) What is the level of design, craftsmanship and service? Is the product or service fulfilling its brand promise? Does the product or service go ‘above and beyond’ your expectations of value?

    Maintenance – What was the buying experience like? Do you enjoy working with the brand or service provider? Do they make things turnkey or simple? Are they responsive to problems / issues? Do they demonstrate initiative and the ability to go above and beyond for customer satisfaction?

    It sounds like you are saying that the maintenance portion trumps value in the equation. I think that is debatable. For today’s consumer value is becoming the new black. It’s an area where I firmly believe you need to exceed expectations. In terms of affecting change, the value portion is also the piece that you have the greatest control over.

    – You state, “The best way to increase customer loyalty is through “making it easy” for customers to interact with customer service to get questions and problems resolved.” I would argue that neglects the 90+% of customers who never interact with customer service. How are you increasing their loyalty, ie. getting them to come back, increase their spending and say good things? Zappos for example only has direct interaction with 5% of its customers. They understand the maintenance portion, going above and beyond with those 5% to the extent that they will recommend 3 competitors if they can not find the correct product. Yet, I’d argue that Zappos offers tremendous value to the 95%. Free shipping both ways, 365 return policy, competitive prices (not low) and unexpected upgrades to expedited shipping.

    – I firmly believe in the concept of marketing lagniappe and leveraging the power of surprise and delight. It’s your responsibility to give your customers something to talk, tweet, blog and post to Facebook about. That being said . . . the little extra shouldn’t feel just like a throw in (offering a refund, a free product or a free service such as expedited shipping). It needs to be something authentic and signature to the brand or service as part of the core offering. Done correctly it can be a differentiator and ultimately develop into a competitive advantage (think the Doubletree Chocolate Chip Cookie or Southwest Airlines ‘Bags Fly Free’).

    Parting salvo – There is no such thing as meeting expectations in marketing. You either exceed or you fall short. No one ever just meets expectations, just like no one is ever truly on time. You are either early . . . or you are late. Just ‘meeting expectations’ is akin to Santa Claus and the Tooth Fairy. Sorry kids they are all myths. If you are setting the bar to meet expectations . . . you will fail. It’s like playing prevent defense in football. It only prevents you from doing one thing . . . winning.

    I hope this sparks some additional discussion.

    Best,
    Stan
    @9inchmarketing

    ‘The longest and hardest nine inches in marketing is the distance between the brain and the heart’

  2. Most companies give lackluster customer service at best, so yes, for them just rising to the point where they’re satisfying customers rather than frustrating them… that’s good for most companies.

    But that isn’t where the money is, and it certainly isn’t where the talented employees want to work.

    I think it’s humorous when folks who are good at measuring and counting trees give business leaders advice on how to tend their forest. Any business leader who takes the advice of Dixon et al, the authors of this study, isn’t much of a leader, is he?

    Aim for spectacular. You’ll gather more talented people to help you. They’ll make it possible for you to get there. Then you can scoff at the rest of the multitude, the “leaders” and their companies that settle for average.

    Never settle for average performance or results. Seriously, why get out of bed in the morning?

    Shame on you, Harvard Business Review. Imagine if Harvard settled for average performance from its professors and students?

  3. Stan, there are many facets to the customer experience. This study was about customer service experiences, which based on my own research has a very strong impact on the customer’s overall perception of a company.

    It’s not about the quantity of interactions, it’s about those that are memorable — in either a good or bad way. When something goes wrong, it generates emotion. Fixing it quickly and easily goes a long way to towards building loyalty, while the opposite can cause an incident to show up as another Dell Hell or United Breaks Guitars video.

    My research found that about 1/3 of “memorable” experiences were in customer service. The other 2/3 were in marketing, sales, purchasing or the actual use of the product/service.

    I agree with your point that surprise/delight matter and setting the bar to be just “good enough” to meet expectations won’t help a company stand out. But the Harvard study seems to show that in the customer service area that companies could move the needle on loyalty more effectively just by taking care of problems easily.

    Said another way, perhaps one conclusion we can draw from this is that more companies should walk (do the basics well) well before they try to run (try to delight customers).

  4. Great points Bob. I really like your stat on the breakdown of ‘memorable experiences’.

    I also think Anne is drawing a similar conclusion at the end of her post. The lowest hanging fruit is getting the basics of customer service correct by a) making things easy for the customer and b) resolving things quickly.

    I just bristle when anyone suggest its not proper to set out to exceed expectations. I agree that you need to get the basics correct. Five Guys Burgers and Fries wouldn’t be a great customer experience if they made a crappy burger and served soggy fries. The free peanuts, multitude of toppings, bottomless drinks and bonus fries wouldn’t move the needle if the burger wasn’t stellar.

    Best,
    Stan

    @9inchmarketing
    ‘The average distance between the brain and the heart is 9 inches. The goal of customer experience is not to capture the mind, but to conquer the heart’

  5. @Ted, have you read the entire suite of studies by CCC?

    To summarize this one study without reference to the underlying research is difficult. While the post title is attention-grabbing, it is misleading. If one reads only this blog or the HBR article, one can arrive at the mistaken conclusion that CCC is discouraging us from trying to delight customers period, which takes the research out of context.

    CCC recommends that when (not if) you have limited time and resources, don’t spend it on “exceptional” CS efforts where the return on investment is low. Instead, spend it where it counts: removing the REASONS customers have to call you in the first place. Spend additional effort actively improving first call issue resolution while requiring as little effort as possible on the customers’ part.

    @Bob said it well – there are many facets to the customer EXPERIENCE. Customer Service is but one touchpoint. And when we as a company fail a customer in some way – whether it is in marketing, at POS, or a product failure – it is the primary job of CS to remediate and do so in a way that doesn’t make the current poor experience worse.

    In the full study, CCC emphasizes their finding that the primary role of CS is to mitigate disloyalty, not deliver moments of “wow” to increase loyalty. One of the most powerful portions of the previous foundational research (that Anne and HBR did not include) found that CS has only very small opportunities to increase loyalty but has enormous opportunity to create and increase disloyalty – mostly in form of missed resolution and unecessary customer effort.

    If you can, go read the research because it’s quite thought-provoking. In practical application, changes we’ve made based on our own internal research (inspired by CCC) have saved us millions by helping us identify and attack drivers of repeat calls.

    Given limited Customer Service resources, CS must focus on areas where we can do the best for the most customers – thoroughly meeting the expectations of the many – while letting marketing and our products themselves do the job of “exceeding customer expectations.”

    http://reviews.cnet.com/smartphones/samsung-vibrant-t-mobile/4505-6452_7-34129373.html

    Lisa
    Sr. Business Analyst, aka “Tree Counter”
    T-Mobile USA

  6. For quite some time now, there has been a huge disconnect between what an organization might define as “exceptional service” and what a customer might define as such. A few years back, Bain & Co. released the findings of a study that found that while 80% of companies surveyed agreed that they provided their customers “exceptional service,” only 8% of their customers agreed.

    There’s absolutely no reason NOT to mine the customer’s experience to find ways you can turn the mundane, the ordinary, into some sort of positive surprise. Dr. Daniel Kahneman’s work in the study of hedonic psychology shows that an event or experienced is primarily defined by two elements: how the experience ended, and the ‘peak’ experience (either positive or negative) within it. Why not strive to have control over the ‘peak’ experience?

    Unfortunately, some who read this article’s headline will think it is license to cut the “unneeded expenses” associated with designing a customer’s experience.

    http://www.quisenblog.com

  7. I don’t see why this point is so controversial. Focusing on customer service is important to achieve differentiation when parity has been achieved on other potential bases of competition. However, if the basics are not right, no amount of elaborate activity in that area will compensate for that.

    The danger is that grand company initiatives dressed up as transformations in customer service can distract companies from noticing these more fundamental issues. Effectively they can amount simply to ‘fiddling while Rome burns’. In short, focus on designing an exquisite silk purse if you can but don’t try to do so if your raw material is in reality a sow’s ear.

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