Delighting Customers Costs More Than it’s Worth…and Other Surprising Findings

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What? Did I really just type that?

I recently attended a conference where Matt Dixon, a group leader at CEB, presented on making your customer experience unique. I asked him if I could recap his excellent presentation and he agreed.

I expected him to cover the benefits of surprising and delighting your customers, but I couldn’t have been more wrong!

Joshie the Giraffe

Joshie the Giraffe

He started his talk somewhat as I’d expected. He told a great story of how the Ritz Carlton surprised and delighted a guest at one of their resorts. That guest was staying at the Ritz with his wife and very young son.  When they returned home, they realized they had left their son’s beloved stuffed animal, Joshie, at the resort. The little one was beside himself, crying, apoplectic, etc. So the father told the boy that Joshie had decided to stay on at the hotel for a few extra days to have some ‘Joshie time.’ It bought Dad some time anyway to find a Joshie replacement.

But then a surprising thing happened. The Ritz Carlton called the father to tell him that they had left a member of their party behind. The father expressed his relief and owned up to the white lie he had told his son. The next day, a box arrived at their home from the Ritz. Inside was of course Joshie, but in addition, these pictures were also included.

Joshie having some 'me' time

Joshie having some ‘me’ time

Talk about the Ritz going above and beyond and saving the day!

But then Matt’s presentation took an unexpected turn. Matt said that the CEB set out to do some research on customer loyalty. They embarked on a 7-year project to study customer service and customer loyalty and concluded that delighting the customer doesn’t actually pay off with increased loyalty. Customer service CAN efficiently and effectively drive loyalty, but not in the way described above.

The CEB study was a large one, and included over 125,000 customers, 5,000 customer service reps, and 100+ companies and it produced 3 main findings:

  1. Delight doesn’t pay. In fact, delighting increased operating costs 10-20% and only succeeded in delighting 16% of the time!

2. Customer Service drives disloyalty. This one might not be entirely surprising. Sometimes companies can raise the ‘sleeping dogs’ who have just not gotten around to cancelling your service until you remind them that they have it. But it’s also because service interactions, according to this study, makes a customer 4x more likely to be DIS-loyal! And it’s because customers aren’t actually satisfied after their interactions.

3. The key is to mitigate disloyalty by reducing the customer service effort. He cited examples that tend to tick customers off: having to call back multiple times, getting transferred around, having to repeat your name and issue over and over again.

And the key to reducing customer service effort is in figuring out how to do things like:

  • Make self-service easy

Let  your customers solve their own problems so that they don’t have to call you. The CEB research showed that the lower the effort required by the customer, the higher the repurchase rate (94% repurchase for low effort vs only 4% for high effort). And they spend more. AND, word of mouth, in a bad way, is way higher for ‘high-effort required’ customers. So when customers are unhappy, they share at a much higher rate than happy customers. And the beauty about making the customer experience easy, is that your costs will go down – according to CEB, by 37%! Why? Because, among other reasons, your customers will have less reason to call you back.

  • Avoid the next issue a customer may have (by anticipating it).

A few months ago, Matt broke a part off of his Dyson vacuum cleaner. So he called to get a replacement. The rep easily helped figure out the model he had and therefore the part that was needed. And she said she was going to send him two of them. Matt asked why two (and also explained a bit about what he does), since he really didn’t think he’d break the part again. And she explained that it’s a little tricky to attach the part, and sometimes customers will snap off the connector while trying to click it in place. Once that happens, the part won’t stay on the vacuum, so you’ll need another one. And once you snap it off once, you understand how to make sure you don’t do it again. She said it’s less expensive for them to send out two of the parts right away, than to take another call from the customer because they broke the connector.

It turns out the KISS (keep it simple, stupid) principal is alive and well and can help you garner customer loyalty!