On a recent business trip, Cheryl arrives at her hotel and is delighted to find a plate of warm chocolate chip cookies waiting for her in the lobby. A week later, she needs a duplicate copy of her misplaced bill, and is frustrated with the number of phone calls and emails required to get it.
Which experience has more of an impact on Cheryl’s loyalty to the hotel chain?
The hotel’s effort to delight Cheryl is a classic play for customer loyalty. In an era of customer empowerment, organizations seek to differentiate their products and brands with exceptional customer service. Service leaders believe there are significant economic gains to be made by exceeding the service expectations of their customers.
In reality, exceeding expectations, or delighting customers, may create “feel good” moments, but doing so has low impact on loyalty or repeat business.
Why effort matters more than delight
In 2013, research leaders with CEB, now Gartner, conducted a quantitative research study with hundreds of customer service organizations and 97,000 customers to investigate their service interactions. The data uncovered four major, and unexpected, findings.
Finding No. 1: The delight strategy doesn’t pay
After analyzing the responses of 97,000 customers, it became clear that there was virtually no difference between the loyalty of customers whose expectations were exceeded and those whose expectations were simply met. In fact, loyalty actually plateaus once customer expectations are met.
And delight, as it turns out, is expensive. Roughly 80% of senior leaders surveyed said the strategy of exceeding customer expectations cost 10% to 20% more in operational costs. Yet, if we look at customer data, the preference is for organizations to simply solve the problem rather than providing delight.
Finding No. 2: Satisfaction doesn’t predict loyalty very well
Many companies still consider customer satisfaction (CSAT) rates as the barometer for customer service success. Unfortunately, data from the survey shows that a strong CSAT score is not a reliable predictor for whether customers will be loyal.
Research shows that 20% of customers who reported they were satisfied with their service interaction also expressed at the same time that they were actually intending to leave the company and buy from somebody else. In other words, just because your customers are satisfied, doesn’t mean they will keep buying from you.
Finding No. 3: Customer service interactions drive more disloyalty than loyalty
Think of customer service reps like lifeguards; they’re usually called upon when something goes wrong. Yet the research shows that a customer who requires a service interaction is four times more likely to drive disloyalty than to drive loyalty.
While a life may not be at stake, a positive experience is. That’s because the data shows that people talk much more frequently about a negative customer service experience than a positive product experience. And they spread negative reviews far wider than positive endorsements.
Data from CEB, now Gartner, shows that 45% of the people who had something positive to say about a company told fewer than three other people. However, 48% of people who had a negative experience told more than ten people.
The goal for customer service leaders, then, is to focus resources on mitigating customer disloyalty. How?
Finding No. 4: The key to mitigating disloyalty is to reduce customer effort
It turns out that the drivers of disloyalty hinge on the amount of effort customers must use to resolve a service issue. While delighting customers with “wow” moments—such as freshly baked cookies—might warm their hearts, it won’t be the key ingredient for them to book another night at your hotel.
Here’s what would: If when Cheryl emailed the hotel to request the bill from her stay, she received it within ten minutes, along with assurances that, next time, it would be emailed to her immediately after check-out.
The majority of customers, notably 96%, who had high-effort experiences reported being disloyal, compared to only 9% of customers with low-effort experience.
The key sources of effort include:
- The need to contact a company more than once
- Being treated like a number or what’s referred to as “generic” service
- Having to repeat information
- The customer’s perception that it takes additional effort to resolve an issue
Further, customers want to contact companies through newer, self-service channels, and service organizations can reduce effort by alleviating opportunities for the next issue to arise.
Wowing customers requires high investment and relies on subjective tastes. And as the data shows: Customer delight won’t bring them back to your brand. Rather, customer loyalty depends on how easy you make it for your customers to do business with you and that’s when they’ll return your service with their repeat business.