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Retaining Your Customers and Developing Customer Loyalty



Written By: Stephen Lynch I’ve read countless books and articles, and listened to numerous public speakers talking about the importance of providing outstanding customer service in order to “delight” customers. They talk about “moments of wow” and “fanatical support” and typically share stories about an employee from a company like Zappos or Nordstrum who did something ... Continue Reading

Written By: Stephen Lynch

I’ve read countless books and articles, and listened to numerous public speakers talking about the importance of providing outstanding customer service in order to “delight” customers. They talk about “moments of wow” and “fanatical support” and typically share stories about an employee from a company like Zappos or Nordstrum who did something completely unexpected and extraordinary for a customer.

Your organization probably has its own legends about a team member who did something that wildly exceeded a customer’s expectations, and the customer was so impressed they wrote a letter to the CEO about it.

Conventional wisdom is that we should make our customer service so surprising and memorable that it gains us customers for life and we earn positive word of mouth referrals by doing extraordinary things.

It sounds like good common sense, and companies spend millions of dollars each year on training to help their staff deliver “moments of wow” and build better relationships with customers. They believe that this will make customers more loyal and earn their repeat business (i.e. improve customer retention / reduce customer churn).

What if conventional wisdom is dead wrong?

The best book I have read on sales in the last decade is “The Challenger Sale”, mainly because of the detailed research that was conducted on more than 6000 sales reps in order to arrive at the optimal sales methodology for delivering better results. Many of the research backed findings were counterintuitive, and run contrary to what is taught by many sales trainers today.

Personally, I love it when new research completely turns so-called conventional wisdom upside down, so I was excited to see the same author, Matthew Dixon, apply a research-based approach to customer service in his new book called “The Effortless Experience”.

Using research compiled from some 97,000 customer interactions, here is a summary of the key findings:

Exceeding expectations doesn’t work!

While most business leaders believe that exceeding customer expectations builds customer loyalty, the data tells a different story. The surprising fact is that there is no difference at all between the loyalty of customers whose expectations are exceeded vs. those whose expectations are simply met.

The research shows that customers don’t really care about being “delighted” by you, and there is no financial return or repeat business to be gained from investing extra time or resources in this area. In short, a “strategy of delight” doesn’t pay.

You need to make things easy.

What the research does show, is that customers want their needs solved quickly and easily, and the best way of describing what customers really want is “an effortless experience”.

It’s a surprising finding, and one that stands in stark contrast to what is commonly published in the business media or presented by self-proclaimed customer experience gurus. Instead of getting your customers to say, “You exceeded my expectations,” you should strive to get your customers to say, “You made it easy for me.”

Self-service is growing in importance.

Customer preferences are shifting away from live customer service to self-service, a finding that now applies to most issue types and customer demographics. This change has caught many companies flat-footed. Customers want to help themselves, right now, in real time; without needing to jump through your customer service hoops. They want a simple, intuitive, self-service experience that makes it unnecessary to contact your company.

This mismatch between how customers want to be served, and how companies think they want to be served masks one of the biggest drivers of customer effort and disloyalty. It’s called “channel-switching”, which is when a customer initially attempts to resolve an issue through self-service, only to have to resort to another means to get an answer.

The research showed that customers who attempt to self-serve first, but are then forced to submit a support ticket or pick up the phone to call you just to get an answer to their questions, are more likely to be dissatisfied and disloyal.

Provide simple easy to find answers.

Unfortunately the search and help functions on many websites are woefully inadequate. Customers get confused or lose confidence in the resources you have provided, because the “Help” section of your website just isn’t capable of answering the questions they are asking. Companies need to provide a comprehensive selection of relevant answers in plain simple language, and chunk related information together.

Customers often use different words than what a company would typically use to describe an issue, so you need consider multiple versions of the same query to eliminate null search results to their queries.

Be proactive.

Whether your customers are using self service, or interacting with your customer service staff, don’t just resolve the issue that the customer is having right now. Proactively resolve the issues that the customer didn’t articulate but might encounter next. Ask yourself, “How can I make sure this customer doesn’t have to call us back?”

Effort reduction is the real key to customer loyalty and retention.

  • Reduce the number of steps the customer needs to take when using your product or service.
  • Eliminate obstacles so they can accomplish their goals and solve their problems quickly.
  • Make it easy for customer to search for and find answers to their questions, so they can help themselves without needing to contact you.

In summary, your focus needs to be on giving your customers fewer reasons to be disloyal, and the best way to reduce customer churn is to reduce customer effort.

Customers just want to solve their problems and get on with their lives, so your job is to make it as easy as possible for them to do just that.

Get your team together now, and make a list of the top 10 areas where you need to make things easier for your customers.

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