Can A Business Charge Before Provding The Service
Reprint: R1007L The notion that companies must become higher up and beyond in their customer service activities is so entrenched that managers rarely examine it. Only a study of more 75,000 people interacting with contact-center representatives or using self-service channels found that over-the-top efforts make little difference: All customers actually desire is a simple, quick solution to their problem. The Corporate Executive Board's Dixon and colleagues describe five loyalty-building tactics that every company should adopt: Reduce the need for echo calls by anticipating and dealing with related downstream issues; arm reps to address the emotional side of client interactions; minimize the need for customers to switch service channels; arm-twist and utilize feedback from disgruntled or struggling customers; and focus on trouble solving, non speed. The authors also introduce the Client Endeavor Score and testify that it is a better predictor of loyalty than customer satisfaction measures or the Internet Promoter Score. And they make available to readers a related diagnostic tool, the Customer Effort Audit. They conclude that we are reaching a tipping point that may presage the end of the phone as the main channel for service interactions—and that managers therefore accept an opportunity to rebuild their service organizations and put reducing customer effort firmly at the cadre, where it belongs.
The Idea in Brief
Conventional wisdom holds that to increase loyalty, companies must "delight" customers by exceeding service expectations. A large-scale written report of contact-center and self-service interactions, even so, finds that what customers really want (but rarely go) is just a satisfactory solution to their service issue.
Reps should focus on reducing the effort customers must brand. Doing so increases the likelihood that they will render to the visitor, increase the amount they spend in that location, and speak positively (and not negatively) near it—in other words, that they'll become more loyal.
To meet customers' expectations, reps should conceptualize and head off the demand for follow-up calls, accost the emotional side of interactions, minimize the need for customers to switch service channels, listen to and acquire from disgruntled customers, and focus on problem solving, not speed.
The idea that companies must "delight" their customers has become and then entrenched that managers rarely examine information technology. Simply enquire yourself this: How frequently does someone patronize a visitor specifically because of its over-the-tiptop service? You can probably think of a few examples, such as the traveler who makes a point of returning to a hotel that has a particularly circumspect staff. But you probably can't come with many.
Now ask yourself: How often do consumers cutting companies loose because of terrible service? All the time. They exact revenge on airlines that lose their bags, cablevision providers whose technicians proceed them waiting, cellular companies whose reps put them on permanent hold, and dry cleaners who don't empathize what "rush order" means.
Consumers' impulse to punish bad service—at least more readily than to reward delightful service—plays out dramatically in both telephone-based and self-service interactions, which are most companies' largest customer service channels. In those settings, our research shows, loyalty has a lot more to practise with how well companies deliver on their bones, even obviously-vanilla promises than on how dazzling the service experience might exist. Still most companies have failed to realize this and pay dearly in terms of wasted investments and lost customers.
To examine the links between customer service and loyalty, the Customer Contact Council, a sectionalization of the Corporate Executive Board, conducted a study of more than 75,000 people who had interacted over the phone with contact-heart representatives or through cocky-service channels such as the spider web, phonation prompts, chat, and electronic mail. Nosotros also held hundreds of structured interviews with customer service leaders and their functional counterparts in big companies throughout the world. (For more detail, see the sidebar "About the Research.") Our research addressed three questions:
- How important is customer service to loyalty?
- Which customer service activities increase loyalty, and which don't?
- Tin can companies increase loyalty without raising their customer service operating costs?
Two critical findings emerged that should bear upon every company'south client service strategy. First, delighting customers doesn't build loyalty; reducing their try—the work they must do to get their problem solved—does. Second, interim deliberately on this insight can assist improve customer service, reduce client service costs, and decrease customer churn.
Trying Too Hard
According to conventional wisdom, customers are more loyal to firms that go above and beyond. But our research shows that exceeding their expectations during service interactions (for example, by offering a refund, a free product, or a free service such as expedited shipping) makes customers only marginally more loyal than simply coming together their needs.
For leaders who cut their teeth in the service section, this is an alarming finding. What contact center doesn't have a wall plastered with messages and e-mails from customers praising the extra work that service reps went to on their behalf? Indeed, 89 of the 100 customer service heads we surveyed said that their main strategy is to exceed expectations. But despite these Herculean—and costly—efforts, 84% of customers told us that their expectations had not been exceeded during their nigh contempo interaction.
One reason for the focus on exceeding expectations is that fully 80% of customer service organizations use customer satisfaction (CSAT) scores as the primary metric for gauging the customer'south experience. And managers often assume that the more satisfied customers are, the more loyal they will be. Only, like others before u.s.a. (well-nigh notably Fred Reichheld), we find fiddling relationship between satisfaction and loyalty. Twenty percent of the "satisfied" customers in our study said they intended to go out the company in question; 28% of the "dissatisfied" customers intended to stay.
The film gets bleaker still. Although customer service can do little to increase loyalty, it can (and typically does) practice a great deal to undermine information technology. Customers are four times more than likely to leave a service interaction disloyal than loyal.
Another way to think nigh the sources of customer loyalty is to imagine ii pies—ane containing things that drive loyalty and the other containing things that bulldoze disloyalty. The loyalty pie consists largely of slices such as product quality and brand; the piece for service is quite small. But service accounts for most of the disloyalty pie. We purchase from a company because it delivers quality products, swell value, or a compelling brand. We exit one, generally, because it fails to deliver on customer service.
Make Information technology Piece of cake
Permit's return to the key implication of our enquiry: When it comes to service, companies create loyal customers primarily by helping them solve their problems rapidly and hands. Armed with this understanding, we tin can fundamentally alter the emphasis of customer service interactions. Framing the service challenge in terms of making information technology easy for the customer tin can be highly illuminating, fifty-fifty liberating, especially for companies that have been struggling to delight. Telling frontline reps to exceed customers' expectations is apt to yield confusion, wasted fourth dimension and try, and costly giveaways. Telling them to "make it like shooting fish in a barrel" gives them a solid foundation for activity.
Telling reps to exceed customers' expectations is apt to yield confusion, wasted time and effort, and costly giveaways.
What exactly does "make it like shooting fish in a barrel" mean? Simply: Remove obstacles. We identified several recurring complaints most service interactions, including iii that focus specifically on customer effort. Customers resent having to contact the company repeatedly (or be transferred) to get an issue resolved, having to repeat information, and having to switch from ane service channel to another (for case, needing to call after trying unsuccessfully to solve a trouble through the website). Well over half the customers nosotros surveyed reported encountering difficulties of this sort. Companies can reduce these types of attempt and measure the effects with a new metric, the Customer Effort Score (CES), which assigns ratings from 1 to 5, with five representing very high try. (For details, see the sidebar "Introducing the Client Effort Score.")
We evaluated the predictive power of iii metrics—client satisfaction (CSAT), the Net Promoter Score (NPS), and a new metric we developed, the Customer Effort Score (CES)—on client loyalty, divers as customers' intention to proceed doing business organization with the visitor, increase the amount they spend, or spread positive (and non negative) word of mouth. Not surprisingly, CSAT was a poor predictor. NPS proved better (and has been shown to be a powerful gauge at the company level). CES outperformed both in customer service interactions.
CES is measured by asking a single question: "How much effort did y'all personally have to put forth to handle your asking?" It is scored on a scale from 1 (very low attempt) to 5 (very loftier effort). Client service organizations can employ CES, along with operational measurements of such things as repeat calls, transfers, and channel switching, to behave an "effort audit" and improve areas where customers are expending undue energy. Many of the companies nosotros work with use CES to arbitrate with customers at risk of defecting.
We found the predictive power of CES to be strong indeed. Of the customers who reported low effort, 94% expressed an intention to repurchase, and 88% said they would increase their spending. Only 1% said they would speak negatively about the company. Conversely, 81% of the customers who had a difficult time solving their issues reported an intention to spread negative word of mouth.
We believe that the superior performance of CES in the service environment derives from two factors: its ability to capture client impressions at the transactional level (as opposed to NPS, which captures more than-holistic impressions of a company) and its power to capture negative experiences too every bit positive ones.
A related diagnostic tool, the Customer Try Audit, can be downloaded at http://world wide web.executiveboard.com/salesandmarketing/CCC-CustomerEffortAudit.html.
During our written report, nosotros saw many companies that had successfully implemented low-customer-endeavor approaches to service. Post-obit are 5 of the tactics they used—tactics that every company should prefer.
1. Don't just resolve the current issue—head off the adjacent 1.
Past far the biggest cause of excessive customer endeavour is the need to telephone call back. Many companies believe they're performing well in this regard, considering they have strong kickoff-contact-resolution (FCR) scores. (Run across the sidebar "What Should You lot Measure?") Even so, 22% of repeat calls involve downstream problems related to the problem that prompted the original call, even if that problem itself was fairly addressed the first time effectually. Although companies are well equipped to anticipate and "forward-resolve" these issues, they rarely practise so, generally because they're overly focused on managing call time. They need to realize that customers gauge the endeavor they expend non simply in terms of how an individual call is handled but also according to how the company manages evolving service events, such as taking out a mortgage or setting up cable service, that typically require several calls.
Bell Canada met this challenge past mining its customer interaction information to understand the relationships among various customer issues. Using what it learned near "event clusters," Bell began grooming its reps not simply to resolve the customer's primary issue but also to conceptualize and address common downstream problems. For instance, a high per centum of customers who ordered a detail characteristic called back for instructions on using it. The company'south service reps now requite a quick tutorial to customers nigh key aspects of the feature before hanging up. This sort of forward resolution enabled Bell to reduce its "calls per upshot" past xvi% and its customer churn by half dozen%. For complex downstream issues that would accept excessive time to address in the initial phone call, the company sends follow-upward e-mails—for case, explaining how to interpret the first billing statement. Bong Canada is currently weaving this issue-prediction arroyo into the telephone call-routing experience for the customer.
Fidelity uses a like concept on its self-service website, offer "suggested next steps" to customers executing certain transactions. Often customers who change their address online call later to order new checks or ask about homeowners' or renters' insurance; therefore, Fidelity directs them to these topics before they leave the site. 20-v percent of all self-service transactions on Fidelity'southward website are now generated by like "next effect" prompts, and calls per household have dropped by 5% since the policy began.
2. Arm reps to accost the emotional side of customer interactions.
Twenty-iv percent of the repeat calls in our study stemmed from emotional disconnects between customers and reps—situations in which, for instance, the customer didn't trust the rep'south information or didn't similar the answer given and had the impression that the rep was just hiding behind general company policy. With some basic pedagogy, reps can eliminate many interpersonal issues and thereby reduce repeat calls.
I UK-based mortgage visitor teaches its reps how to listen for clues to a client'south personality type. They quickly appraise whether they are talking to a "controller," a "thinker," a "feeler," or an "entertainer," and tailor their responses accordingly, offering the customer the balance of particular and speed appropriate for the personality type diagnosed. This strategy has reduced repeat calls past a remarkable 40%.
One visitor teaches its reps how to listen for clues to a customer's personality blazon and tailor their responses accordingly.
The lighting company Osram Sylvania sifts through its call transcripts to pinpoint words that tend to trigger negative reactions and drive repeat calls—words like "can't," "won't," and "don't"—and coaches its reps on alternate phrasing. Instead of saying "We don't have that detail in stock," a rep might explain, "We'll take stock availability for that item in two weeks." Through such simple changes in language, Osram Sylvania has lowered its Customer Attempt Score from ii.8 to ii.2—18.v% below the boilerplate we encounter for B2B companies.
LoyaltyOne, the operator of the AIR MILES reward programme, teaches reps to probe for information they can use to better position potentially disappointing outcomes. A rep dealing with a customer who wants to redeem miles for an unavailable flight might learn that the caller is traveling to an important business coming together and use this fact to put a positive spin on the need to book a different flying. The rep might say, "Information technology sounds like this is something you tin't exist late for. The Monday morning time flight isn't bachelor, but with potential delays, you'd be cutting information technology shut anyway. I'd recommend a Sunday evening flight so that you don't risk missing your meeting." This strategy has resulted in an 11% decrease in repeat contacts.
3. Minimize aqueduct switching by increasing self-service aqueduct "stickiness."
Many companies ask, "How can we go our customers to get to our self-service website?" Our research shows that in fact many customers take already been there: Fifty-seven percent of inbound calls came from customers who went to the website start. Despite their desire to have customers turn to the web, companies tend to resist making improvements to their sites, assuming that only heavy spending and technology upgrades will induce customers to stay there. (And even when costly upgrades are made, they often prove counterproductive, because companies tend to add complicated and confusing features in an endeavour to go on upwards with their competitors.)
Customers may go overwhelmed by the profusion of self-service channels—interactive voice response, websites, email, chat, online back up communities, social media such as Facebook and Twitter, and so on—and ofttimes lack the power to make the all-time choice for themselves. For case, technically unsophisticated users, left to their own devices, may get to highly technical online back up communities. As a result, customers may expend a lot of effort bouncing between channels, only to pick upward the phone in the end.
Cisco Consumer Products now guides customers to the channel it determines will suit them all-time, on the basis of segment-specific hypotheses generated by the visitor'southward customer experience team. Linguistic communication on the site's home page nudges engineering gurus toward the online support community; those with less technical expertise are steered toward noesis articles by the hope of simple step-by-step instructions. The company eliminated the electronic mail selection, having plant that it didn't reliably reduce customer endeavour. (Our inquiry shows that 2.4 e-mails, on average, are needed to resolve an issue, compared with one.7 calls.) When Cisco Consumer Products began this program, in 2006, just 30% of its customer contacts were handled through self-service; the figure today is 84%, and the book of calls has dropped appropriately.
Travelocity reduced customer effort just by improving the assistance section of its website. It had learned that many customers who sought solutions there were stymied and resorted to the telephone. By eliminating jargon, simplifying the layout, and otherwise improving readability, the visitor doubled the utilize of its "top searches" and decreased calls past 5%.
4. Use feedback from disgruntled or struggling customers to reduce customer effort.
Many companies carry postcall surveys to measure internal functioning; still, they may neglect to use the data they collect to learn from unhappy customers. Merely consider National Australia Group'due south approach. The company has frontline reps specifically trained to call customers who have given information technology low marks. The reps focus showtime on resolving the customers' issues, but they also collect feedback that informs service improvements. The visitor's issue-resolution charge per unit has risen by 31%.
Such learning and intervention isn't limited to the telephone channel. Some companies monitor online behavior in lodge to place customers who are struggling. EarthLink has a dedicated team of reps who step in every bit needed with clients on its self-service website—for example, by initiating a conversation with a customer who has spent more ninety seconds in the knowledge eye or clicked on the "Contact Us" link. This plan has reduced calls by viii%.
5. Empower the front line to deliver a low-effort experience.
Incentive systems that value speed over quality may pose the single greatest barrier to reducing customer endeavor. Virtually customer service organizations however emphasize productivity metrics such as average handle time when assessing rep operation. They would exist better off removing the productivity "governors" that get in the way of making the customer's experience piece of cake.
An Australian telecommunications provider eliminated all productivity metrics from its frontline reps' performance scorecards. Although handle time increased slightly, repeat calls fell by 58%. Today the company evaluates its reps solely on the footing of brusque, direct interviews with customers, substantially asking them if the service they received met their needs.
Freed to focus on reducing customer effort, frontline reps can hands pick depression-hanging fruit. Ameriprise Fiscal, for example, asks its client service reps to capture every instance in which they are forced to tell a customer no. While auditing the "no's," the company constitute many legacy policies that had been outmoded by regulatory changes or organisation or procedure improvements. During its first year of "capturing the no'south," Ameriprise modified or eliminated 26 policies. It has since expanded the program by request frontline reps to come up with other process efficiencies, generating $1.2 million in savings as a result.
Some companies take gone even further, making low customer effort the cornerstone of their service value proposition and branding. South Africa's Nedbank, for instance, instituted an "AskOnce" promise, which guarantees that the rep who picks up the telephone will own the customer'due south issue from get-go to finish.
The immediate mission is clear: Corporate leaders must focus their service organizations on mitigating disloyalty by reducing client attempt. But service managers fretting about how to reengineer their contact centers—departments congenital on a foundation of delighting the client—should consider this: A massive shift is nether way in terms of customers' service preferences. Although virtually companies believe that customers overwhelmingly prefer live telephone service to self-service, our nigh recent data show that customers are, in fact, indifferent. This is an important tipping point and probably presages the end of phone-based service as the primary channel for customer service interactions. For enterprising service managers, it presents an opportunity to rebuild their organizations around cocky-service and, in the process, to put reducing client effort firmly at the core, where it belongs.
A version of this article appeared in the July–August 2010 outcome of Harvard Business Review.
Can A Business Charge Before Provding The Service,
Source: https://hbr.org/2010/07/stop-trying-to-delight-your-customers
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