Loyalty? We don't need no Customer Loyalty

That is the truth – organizations that focused on customer loyalty are taking the wrong path to customer retention.  Mea culpa, I was one of those people who saw Customer Loyalty as the end-all for customer service.  If you could just achieve high levels of loyalty, the idea goes, you won’t have to worry about customer retention.  I have since learned through work I have done with several clients, that loyalty carries no reward with it.  There is no higher wallet-share, there is no higher likelihood of repeat purchases — there is nothing that foretells that Customer Loyalty helps an organization, and plenty to show otherwise.

Maria Palma wrote in her blog (Customers Are Always) a couple of days ago that Bargains and Deals may just trump customer loyalty.  I commented in that blog that loyalty only brings up your cost of customer maintenance, and it does not provide you with the benefits you expect.  Let me expand on that.  Customer Loyalty and Customer Satisfaction are similar concepts: they rely on feelings that are not easy to manage or control, are expensive and cumbersome to measure appropriately, and they have not really shown any correlation between what they cost and the benefits they bring.  It is just another way to look at a customer feeling about a company, instead of a product or experience, that cannot be used to predict future behavior.

In the movie “Nothing in Common” Jackie Gleason plays an older salesperson who prides himself in having the best relationships with his clients.  They all admire him, respect him, and have great loyalty towards him.  Early in the movie, a brash young new VP of sales calls him into his office to discuss his performance.  He is truly impressed by the relationship he has with his clients, but when he looks at the performance he is dismayed.  Abysmal sales numbers have been trickling in for the last few years.  Turns out all his clients are now buying from the competition because they have better shipping policies and cheaper prices.  So much for loyalty, and for Jackie’s job.

I said it before, and I will say it again.  Don’t focus your metrics on your customer’s feelings.  Instead, focus on what matters. There are three things you can do to ignore customer satisfaction and customer loyalty and come out ahead:

1.  Build a solid infrastructure (technologies and processes) to deliver great customer experiences across channels.

2.  Extend it to include feedback, sales, marketing, operations, and to create end-to-end commendable customer experiences

3.  Ensure that the delivery of your experiences meet customer expectations, and use expectations to improve your delivery

Then, you won’t have to worry about loyalty, satisfaction, or anything like that.  Then you will be able to simply focus on doing the best possible job for your customers – and get rewarded for it.

Are you focusing on the right metrics? Are you doing the right thing?

How to Score a 90% or more Customer Satisfaction

Lots have been said about customer satisfaction see at the end of this entry for entries on this blog about customer satisfaction).  Organizations struggle to get their customer satisfaction scores under control, they “need” or want to get them to a certain number (for some reason, 76% seems to be the magical number most of them are trying to reach today, slightly lower than the 80% we saw couple of years ago).

Tons of money, time, and resources are piled into these projects.  None of them realize the poor value of customer satisfaction as a stand-alone score.  I have been saying for quite some time that customer satisfaction does not rank very high in the list of metrics you should follow — yet, I get more and more requests everyday on how to calculate it and use it.  As a Public Service I am going to give you four secrets on how to score higher in customer satisfaction surveys:

1. Know who to survey. what happens if you ask someone who is disgruntled or unhappy? there goes your customer satisfaction score down the drain. Know your customers, segment them, and pick the segment that is likely to return higher scores.  Survey them.  In any customer base there is always a 8-10% that would give you high scores regardless of what you do, another 10-15% or so will never like you no matter what.  There is also 20-30% that don’t like to give low scores in surveys.  Find out who the first and last group are and try to survey them and not the others.

2. Select the words for your questions carefully. There are many books written on how to ask questions for surveys, comparing the different words you use and the results you get.  You see this being used in political surveys all the time: using support vs. agree, think vs. feel, and many more.  Truth is, how you write the question will bias the answer you get.  People react different when you use “think” instead of “feel”.  Psychologically, they feel that feelings are more private and their reaction is to guard their feelings by lowering scores so you don’t know how they feel.  They tend to give you higher scores when you ask for their thoughts.

3. Change the scale for your metrics. Feedback “experts” will tell you that using smaller scales (e.g. from one through five)  will give you less granularity into your answers.  It will also give you higher scores.  Customers are not inherently out to give you poor scores, but the more choices they have the more likely they are to split hairs.  In smaller scales it is easier to get to an 80% of satisfaction, since that is only 2 out of 5 scores, than in a larger scale where it is 3 out of 10.  Using numbers instead of words (such as agree or disagree with their different variations) will give you higher scores; call it human nature, but we don’t like to agree.

4. Coerce higher scores. If you offer a prize or a drawing as a result of the feedback your customers provide, you are bound to have higher scores.  Respondents have the feeling that if they are “nicer” to you they have a higher chance of winning.  They believe that if they give you lower scores you will throw away their entry and they won’t qualify for the contest or drawing.  This is mostly because they don’t understand the value of the feedback they provide, and the benefit for them of being honest: they are after the money.

What is that? Manipulation?  Absolutely, no questions about it.  See why you should not use this metric? It is not going to improve your relationships with your customer, guide your customer service changes appropriately, or make you more liked by your customers.  Actually, if you rely on this metric to guide your operations you are likely to loose more customers this way.  Use with caution, good measure, and within a metrics program that looks at other metrics to make sure you don’t over-rely on it.

Are you still using customer satisfaction as a metric? Did I convince you otherwise?

Links to Customer Satisfaction Entries

http://evergance.wordpress.com/2008/05/13/the-one-two-combo-to-end-customer-satisfaction/

http://evergance.wordpress.com/2008/05/23/the-end-of-customer-satisfaction/

Hire More Customer Service Representatives for Free

Customers demand more – more features, more service, more representatives.  You look at what you can do within your budgeting constraints and probably want to start crying.  Not much more you can do, or afford to do; least of all, bring in more people.  Certainly, other corporations are doing better than you – right?

Well, No. Everyone is asking the same question: how can we grow the number of customers without increasing the number of representatives or the cost for customer maintenance.  Alas, leading corporations began to realize in the last 12 months what it takes to achieve this difficult balance.  Hire more customer service representatives.  Lots more… like millions of them.

That’s right.  You can get as many more customer service representatives as you want – for free.  Yes, FREE.  Impossible you say?  Unlikely you express? (OK, I ran out of synonyms without checking the thesaurus).  Nay.  Easier than you think.  The answer is simple: empower your customers to become customer service representatives.  There are three steps to get there:

First, find the right interactions.  Comb your logs, ask your agents.  What is the largest number of interactions that your customers could solve on their own? Changing an address? Establishing new service? Getting a refund?  In the early days of web self-service, AT&T Wireless (the old one, not this one) leaped ahead of their competitors by offering the ability to claim credits for dropped calls automatically through a web interface.  The saved lots of time and money and (more important) lots of CSRs time to take on other tasks.  No interaction is too complex or too simple if you can figure out how to automate it.

Which brings us to step two. Automate, entirely and completely, the chosen interactions.  That means there is no human check at the end of the process to ensure it is correct.  You write all the business rules and exceptions for processing, feed them into a rules server, test them.  Then flip the switch.  The computer will now handle those interactions for you – and kick out the exceptions you want or need.  Your only job is to monitor the results periodically and tighten the rules and exceptions as you go along.  Can you imagine the savings if you deflect all those interactions from the phone?

Right about now your question is – will people use it?  Well, here is where it depends on you – our third step. Advertise, advertise, advertise.  “Force” customers to use the system (that means make it simple, available, and advertise it all over).  Make it a service differentiator.  Make it part of your brand.  Let them know the benefits, incentivize them to use it.  Make sure it performs flawlessly each time – and that necessary handling of exceptions is above average for speed and satisfaction (i.r. err on the side of the customer).

Guess what?  You just hired millions of new CSRs towork for FREE.  What do you think?