April 13, 2018 | Peter Malamas

Customer Loyalty: the CX Golden Rule, Magic Metrics, and the AI connection (Part I)

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This post was originally published on LinkedIn on April 5, 2018.


A recent conversation on minimizing customer churn ultimately led to the question “what’s the single most important measure we can focus on to increase customer loyalty?”

Achieving higher customer loyalty is a huge business issue that becomes more challenging every day: our own channels compete against each other, competitive pressures increase with product and service parity, and comparative pricing information is readily available to consumers. These decreasing obstacles to your customer switching providers further increases the likelihood of customer churn.

So, doesn’t logic dictate that, given less product and service differentiation and decreasing obstacles to your customer switching, that you need to build exceptional customer experiences to drive high satisfaction customer interactions that will keep your customers loyal in increasingly competitive marketplaces? Isn’t high satisfaction the golden metric to achieve for increasing customer loyalty, driven by exceeding your customer’s expectations?

Or is achieving highest possible customer satisfaction — with some brands even going so far as trying to “delight their customers” — just too lofty a goal with today’s short attention span customer in today’s dynamic market conditions? Is driving high customer satisfaction just wasted effort and expense, in comparison to the potential upside you’ll gain? Is there another CX golden metric that’s much simpler to accomplish, that also provides higher ROI?

If the low level of effort required for your customers to switch providers is consistently decreasing, isn’t achieving better customer loyalty as simple as making all of your customer’s interactions with your own brand even easier, so they wouldn’t bother with the greater effort of switching providers? Easy interactions are even one of the key components of what I consider the CX golden rule: Customers prefer brand experiences that anticipate what we want, deliver it with minimal effort required from us, and meet or exceed our overall expectations in the process.

If in fact making things as easy as possible for your customers is the key, how do you know if you’re doing it right? A good start is to:

  • pick a metric that measures customer effort
  • continuously measure the results of those effort-reducing actions on your customers’ behavior
  • iterate on further actions to most effectively continue optimizing for reducing customer effort

If minimal customer effort is the key factor in producing customer loyalty, you should then achieve your customer loyalty goal. As a bonus, this smooth and frictionless experience should produce other positive customer journey outcomes, such as more purchases and positive recommendations.

One method to measure ease in transactions is a one question metric: Customer Effort Score, or CES. The idea is that the customer who completes the interaction with your brand most easily, every time, will be a happy and loyal customer. The CE question asks your customer to quantify their feelings on their level of effort to get something done. It’s usually on a 5 point numeric scale, but in the real world I’ve seen even a 3 position non-numeric scale of happy to sad faces. No matter the scale, the concept is that easy is better than being difficult, and your customers will love you for being easy. What else do you need to know, right?

Another perspective on measuring and minimizing customer effort – particularly in live agent interactions – is “first call resolution” which is a binary yes or no: did we solve the customer’s issue on our first try, in one call? Yes is good. This first-time resolution concept can also be applied to a digital interaction, based on a “first time visit for this issue” question combined with a “task accomplishment” question. Yes to both means your digital visitor achieved their desired goal on the first visit.

Making it easy to get through an interaction, and accomplishing it in one try, is often great for your customer, and one potential indicator of positive outcomes like customer loyalty. But scores that measure effort level and quick resolution alone can be misleading without further context. These are not golden metrics by themselves.

Why? An interaction being low effort alone does not insure that people will buy, convert, stay loyal, or recommend after exiting that low effort interaction.

Let’s say your retail team has this low effort/easy one call resolution interaction: “Hi there Ms. Valued Customer, you have exquisite taste. That item you’re trying to order is in high demand. It’s on back-order for 4 weeks, but we’ll make sure you’re at the top of the list to receive it!”. This customer had a quick and easy interaction in which your agent provided a professional answer containing accurate info, in one call. Customer effort ranking = 1 (lowest/”best”). But the customer satisfaction score will be pretty low on this transaction, because the customer did not accomplish their task of getting a particular item, and you definitely didn’t exceed their expectations.

Since this interaction was not satisfying, this customer will exit this low effort/good CE score interaction with low loyalty, very likely to look elsewhere for that product, and perhaps leaving your brand forever if they find another provider that they like. Even worse, they may also negatively recommend your brand on social media (and give you a low Net Promoter or Recommend score if you’re measuring that too), unless you do something special to exceed their expectations (provide a discount? Offer free shipping?).

In another example, you are a B2B service provider, and a new customer has a complex problem to solve. They entered their Tax Identification number incorrectly into your system when they registered online, and that created a nightmare scenario in which all of their services and invoicing are incorrectly associated with another one of your customer’s accounts, who is one of their direct competitors! They call and speak to a representative at your company. Your rep goes the extra mile to fix the issue over multiple long calls. This is a big ugly problem: Effort to fix = 5 (Highest). Resolved on first call? No, they needed to gather some info from their Finance team, and your rep needed to do some internal research to make sure everything was satisfactorily resolved. Did they accomplish their task? Yes. Were they highly satisfied with your firms’ effort? Yes. Did you exceed their expectations, and will they remain loyal to your brand due to your handling of this difficult high effort situation? Absolutely.

For those of you measuring Service Level Agreements and only focused on meeting SLA times or percentages in interactions, you’ll experience similar challenges. You’ll get what you measure: Reps will be very adept at meeting SLAs if that’s the only metric they are being asked to achieve. They will do things quickly, while perhaps disregarding other more important customer outcomes that aren’t being measured, resulting in quick resolutions that are not always the most satisfactory from the customer perspective. This could often result in good SLA metrics, but miss your customer churn goal.

About the Author

Peter Malamas is Director, Enterprise Accounts at ForeSee. His specialty is online solutions that help companies acquire new customers and build stronger relationships with existing customers, using customer experience analytics, digital marketing, and social media. Peter’s experience ranges from individual sales contributor to a leader who’s started-up and consistently grown product lines and business units as Director of Strategic Partnerships at eWayDirect, VP Sales & Product Management at SGA Executive Tracker, and President at idEXEC, an infoGroup company. Peter is an Advisory Board Member to the CX@Rutgers Customer Experience Certification program.

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