A while back, I attended a conference and heard a speaker discuss customer success and retention. They pointed to an oft quoted statistic that studies show it costs five times as much to sell to a new customer as it does to sell to an existing customer. This statistic highlights the importance of customer retention. The speaker put up an interesting equation:
Delight = Trust
Trust = Retention
The theory goes, if we delight our customers they will trust us, and if they trust us they will stay with us and become advocates. As advocates, they will be reference-able, and new customers’ buying decisions are most influenced by positive references.
Delight is an interesting term that does not have a clear definition. It is generally understood to be much stronger than ‘satisfied’ or even ‘happy.’ Delight comes from something a bit surprising – in a positive way. Nobody wants to hear a reference say “Let me tell you about my experience with vendor X. It was perfectly adequate…”. Compare that to a reference who says “I am delighted with vendor X, and I am surprised by how exceptional the experience is…”.
However, delight has a cost. Some have described seeking to delight customers as chasing the unobtainable. In fact, a survey by Gartner and The Corporate Executive Board (https://asociaciondec.org/wp-content/uploads/2016/08/Blinded-By-Delight.pdf) concluded that customer delight only happens 16% of the time, but striving for it increases operating cost by 10-20%. The surprising element they found was that customers whose expectations have been exceeded are no more loyal than those whose expectations have simply been met.
The most interesting finding was the relationship between customer effort and loyalty. Call this the hassle factor. When a customer has a problem or need that requires a vendor to service the account, the amount of effort the customer has to expend to get satisfaction is directly linked to loyalty. The more hassle involved in dealing with a vendor, the less likely the customer is to remain loyal. Hassle includes: having to make repeated calls to the vendor versus first-contact resolution, or needing to explain a situation multiple times to multiple people before finding the person who can actually help, or having to wait ‘too long’ for a response and resolution. The CEB recipe for success is as follows:
Track Customer Effort, not Customer Satisfaction—Identify and prioritize improvements that result in the largest loyalty wins.
Provide a Guided Resolution Experience—Steer the customer to the lowest-effort service channel for their issue on the first try.
Solve the Customer’s Next, Not Just Current, Problem—Avoid costly repeat contacts that frustrate the customer and increase costs.
Engineer Experiences to Reduce Customers’ Perceived Effort—Make even a complex interaction feel like low effort by reducing customers’ perceived effort to resolve their issue.
Create a Judgment Climate to Enable and Empower Staff—Frontline staff must exercise the judgment necessary to deliver tailored, low-effort, not generic or robotic service interactions to customers.
Companies that have embraced these concepts have also adopted tracking their Customer Effort Score (CES). Similar to the popular NPS score, the CES asks customers a simple question: “on a scale of ‘very easy’ to ‘very difficult’, how easy was it to interact with [company name].” Typically, this is a five point scale (very difficult, difficult, neither, easy, very easy). In combination with the NPS score, a vendor can get a high fidelity picture of customer satisfaction.
One last element to consider is the language vendor personnel use when interacting with customers. In a study performed by Sylvania lighting company, they discovered the importance of the words their call center personnel used. Words like ‘can’t, won’t, and don’t’ caused negative customer perceptions. The difference between saying “we don’t have that item in stock” versus “We will have stock available in two weeks,” made a huge impact on customer perception. Creating a language for customer interactions and training front-line staff made a measurable improvement in CES. In Sylvania’s case, the improvement was nearly a half point.
Everyone has an opportunity to contribute to delighting customers and reducing hassle. The leadership team must instill a values-based culture that embodies a service mindset and guides the entire company to anticipate customer needs and resolve them with the absolute minimum customer hassle. The result will be improved retention. Delighting a customer is a nice ideal, and could come from a single exceptional action, but more likely, lasting satisfaction and loyalty will come from an ongoing series of interactions that demonstrate commitment to customer success with minimum hassle. The result will be trust and reference-ability.