Cut the crap and solve customers problems

A lot of companies execute customer service strategies to delight their customers. When a customer files a complaint, by phone, mail or another channel, a well trained customer service representative (CSR) will do his utmost to satisfy the customer. Maybe you have had some experiences yourself when contacting your phone company, cable provider, insurance company or energy supplier. You just had a simple request, but you had to call back a few times to get it fixed.

Customers punish bad service by dropping a company and reward good service with retention. Customers become loyal customers when their efforts, the work they have to do to get their problems solved, are being reduced. Customers do not become more loyal customers by offering them refunds or free service/products.

Ok, what does that mean? The research of the CCC shows that exceeding customer expectations during the service interaction makes customers slightly more loyal than simply meeting their needs. So cutting the crap and solving problems does a lot more than giving presents. But ironically the research shows that 89% of the surveyed heads of customer service departments told that the main strategy is to exceed customers' expectations. However this costly effort 84% of the customers surveyed told that their expectations had not been exceeded, during the service interaction.

A reason for the focus on exceeding customer expectations is that about 80% of the customer service organizations use customer satisfaction scores (CSAT) as primary indicator for measuring customer satisfaction. Managers assume that customer satisfaction builds loyalty. But research shows that it's not. There is little relation between satisfaction and loyalty.

This fact is best shown in this conclusion: 20% of the satisfied customers, in the study, said they intended to leave their supplier. But 28% of the dissatisfied customers told they intended to stay with the company in question. And it gets worse; customer service can do little to increase loyalty, but it can do a lot to undermine it. Customers leave a service interactions four times more often disloyal than loyal. So customers would like to buy from a company because of it delivers great value (price, quality, brand), but they leave because it fails in customer service.

This post is part of a series of blogs about the relationship between customer satisfaction and loyalty. That is a research project from the Customer Contact Council and has been published in the Harvard Business Review, edition july/august 2010.

Next blog is this series: Make it easy, make it no effort
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