According to a recent customer satisfaction study reported in this month’s Harvard Business Review; the answer is probably “yes.”

customer loyaltyThe idea that companies must “delight” their customers or “exceed customer expectations” has become so entrenched in business lore that it is rarely questioned. According to conventional wisdom, customers are more loyal to companies that go ‘above and beyond’.

In the Harvard Business Review article, “Stop Trying to Delight Your Customers,” by Dixon et al., the authors reveal new research that shows “exceeding customer expectations” – perhaps by offering a refund, a free product or free service such as expedited shipping – has a marginal impact on customer loyalty compared to meeting the customers’ needs and expectations.

The article is based on a multi-country study conducted by the Customer Contact Council, a division of the Corporate Executive Board, over a three year period. More than 75,000 B2B and B2C customers were surveyed regarding their customer service experiences and the impact of the experience on their loyalty. Customers interviewed had interacted with contact-centre representatives by phone or through self-serve channels such as web chat, interactive voice response and email.

The objective of the study was to evaluate the impact of customer service efforts to “delight” the customer on the customer’s “loyalty”. “Loyalty” was defined as customers’ intention to continue doing business with a company, increasing their spending or saying good things about it (or refrain from saying bad things).

The study showed that when customers reported a “very low effort” was required to have their problem or issue resolved:

  • 94% intended to repurchase
  • 88% said they would increase their spending

When the effort to resolve the problem was considered by the customer to be “very high”:

  • 81% intended to spread negative word of mouth

The best way to increase customer loyalty is through “making it easy” for customers to interact with customer service to get questions and problems resolved.

What does it mean to “make it easy” for customers? The study found three key factors, that result in the customer having to expend extra effort/work hard to get their problem or question resolved and have a negative impact on customer loyalty:

  1. Having to place multiple calls to address the same issue
  2. Having to repeat the same information to multiple contact points
  3. Having to switch from one service channel to another (e.g., having to phone after trying unsuccessfully to resolve the issue through the website)

The study also identified several key strategies for companies to use to address these issues. For example, through cluster analysis, the study revealed groups or clusters of problems that occurred together or in sequence, requiring the customer to call again. By equipping the customer service personnel with the tools to “head off” the next problem, companies can eliminate the need for multiple calls. Another example is through training customer service representatives to deal with the emotional side of customer interactions (e.g., frustrated customers).

To read the full article, click on the link below.

Dixon, M., Freeman, K. & Toman, N. “Stop Trying to Delight Your Customers,” Harvard Business Review, Jul-Aug 2010. Web. 08 July 2010.

Does your company “make it easy” for customers to get their questions and problems resolved? What are the most frequent, and the most thorny problems your customers experience? How can you improve the problem resolution process?

To find answers to these and other key questions contributing to retention of satisfied customers, contact The Dunvegan Group.