Commentary by George Klein
Customer loyalty research has shown that companies can lose up to 30 percent of their customers every year and winning new customers can be up to 20 times more expensive than retaining existing customers.
There are different methods for scoring customer loyalty. The most well-known are the Net Promoter Score and Customer Satisfaction Score. In the past few years, Customer Effort Score has emerged as another Indicator of customer loyalty. An example of a CES question can be as simple as, “The company made it easy for me to handle my issue.”
The CES monitors customer perceptions on how difficult it is to do business with a company. When customers have to expend more effort than they expect with a company, they get frustrated and leave. High customer effort equals low customer loyalty. In fact, research conducted by the Customer Contact Council found that businesses are 10 times more likely to lose a customer if they make it hard for them to resolve an issue.
Many companies focus efforts on exceeding customer expectations by offering refunds, free products, or free service. The Harvard Business Review found that those strategies make customers only marginally more loyal than simply meeting their needs.
The message is that organizations create loyal customers primarily by removing obstacles that make it hard to do business with them. When customers have a service issue, they are not interested in being “delighted.” They simply want their issue resolved.
So what increases the customer’s effort when resolving an issue? Customers are frustrated with trying to find the right person to handle the issue. They are frustrated with being put on hold, having to repeat themselves, and having to contact a business multiple times. In addition, asking customers to switch channels to handle a problem increases effort. For example, if a customer is asked to call a customer service line after initiating communication with a web form, effort is increased.
How can companies reduce the customer effort? I believe that one of the best ways to reduce effort is to offer customers an easy two-way channel they can use to privately share feedback and resolve issues with a business—all from their mobile phone. A two-way channel enables businesses to develop a more personal relationship while meeting the customers’ need for quick communication.
Consumers want an easy way to take care of issues and will reward those businesses who meet that expectation.
George Klein is the CEO/Founder of Peoplocity, a customer feedback platform. Contact him at George@peoplocity.com.