Customer Effort Score - HBR Article

Customer Effort outperforms Net Promoter and Customer Satisfaction scores – Harvard Business Review found

Delighting customers doesn’t build loyalty; reducing their effort - the work they must do to get their problem solved – does, a study conducted by Harvard Business Review found, and acting deliberately on this insight can help improve customer service, reduce customer service costs, and decrease customer churn.

According to conventional wisdom, customers are more loyal to firms that go above and beyond. But the Harvard Business Review (HBR) research shows that exceeding their expectations during service interactions (for example, by offering a refund, a free product, or a free service such as expedited shipping) makes customers only marginally more loyal than simply meeting their needs.

The study revealed that managers, focusing all their effort into increasing customer satisfaction, might be spending their money on a wind. “80% of customer service organizations use customer satisfaction (CSAT) scores as the primary metric for gauging the customer’s experience. And managers often assume that the more satisfied customers are, the more loyal they will be. But, like others before us (most notably Fred Reichheld), we find little relationship between satisfaction and loyalty. Twenty percent of the “satisfied” customers in our study said they intended to leave the company in question; 28% of the “dissatisfied” customers intended to stay,” say HBR study authors.

HBR suggests tracking the reoccurring complaints and removing those obstacles to reduce customer effort. “Make it easy” they suggest to the companies who strive to delight the customer.

“Companies can reduce these types of effort and measure the effects with a new metric, the Customer Effort Score (CES), which assigns ratings from 1 to 5, with 5 representing very high effort,” HBR suggests.

CES is measured by asking a single question: “How much effort did you personally have to put forth to handle your request?” It is scored on a scale from 1 (very low effort) to 5 (very high effort). Customer service organizations can use CES, along with operational measurements of such things as repeat calls, transfers, and channel switching, to conduct an “effort audit” and improve areas where customers are expending undue energy.

“We found the predictive power of CES to be strong indeed. Of the customers who reported low effort, 94% expressed an intention to repurchase, and 88% said they would increase their spending. Only 1% said they would speak negatively about the company. Conversely, 81% of the customers who had a hard time solving their problems reported an intention to spread negative word of mouth.”

According to HBR, many companies ask, “How can we get our customers to go to our self-service website?” The research shows that in fact many customers have already been there: Fifty-seven percent of inbound calls came from customers who went to the website first.

HBR recommends reducing the customer effort on websites by eliminating jargon, simplifying the layout, and otherwise improving readability.

The review also warns that incentive systems that value speed over quality may pose the single greatest barrier to reducing customer effort and recommends removing the productivity “governors” that get in the way of making the customer’s experience easy.

“The immediate mission is clear: Corporate leaders must focus their service organizations on mitigating disloyalty by reducing customer effort. But service managers fretting about how to reengineer their contact centres—departments built on a foundation of delighting the customer—should consider this: A massive shift is under way in terms of customers’ service preferences. Although most companies believe that customers overwhelmingly prefer live phone service to self-service, our most recent data show that customers are, in fact, indifferent. This is an important tipping point and probably presages the end of phone-based service as the primary channel for customer service interactions. For enterprising service managers, it presents an opportunity to rebuild their organizations around self-service and, in the process, to put reducing customer effort firmly at the core, where it belongs.”

Source: Stop Trying to Delight YourCustomers, Harvard Business Review