Most businesses are well aware of the need to save their customers from unnecessary effort but why is this so important and how can it be approached in a strategic fashion?
Customer effort is often discussed in terms of the physical, cognitive and emotional exertion and the time investment that interactions and transactions involve. These are all useful factors to consider when addressing the problem of customer effort at a tactical level within an operation.
However, when considering the issue at a more strategic level it can be helpful to think of customer effort in economic terms. Moira Clark of the Henley Business School defines customer effort as the “nonmonetary cost of consumption” highlighting the important fact that customer effort is an integral element of your business’s value proposition. You can offer the best prices in the market but if you’re a pain to do business with then customers may choose your competitors.
CUSTOMER EFFORT STRATEGIES
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There are, of course, times when customers willingly expend significant effort to interact with companies. The sidewalk campouts on iPhone launch days or the waiting lists for the latest Ferrari are notable examples. However, in these cases exceptional product design and marketing are more than sufficient to outweigh the nonmonetary cost involved in obtaining them. Some might even argue that the customer effort only serves to enhance the aspirational aura that surrounds products like these.
Other brands such as mobile telco GiffGaff and toy company Lego have been successful in building collaborative user communities that customers happily invest their time in as it enables them to influence and contribute to the direction of the business.
Budget airline Ryanair traditionally operates a ‘no-frills’ model wholly focused upon offering rock bottom prices with limited attention paid to customer experience. However, recently it invested €10 million in its website to reduce the number of clicks needed to make a booking from 17 to 5 in a defensive move to cut customer abandonment and defection rates.
Other firms use saving customers’ effort as a primary means of differentiation from their competitors. American online food delivery service Seamless opportunistically fills a market niche by providing a way to order food that was quicker and easier than using the phone. In contrast, for online retailer Amazon, customer ease is a key differentiator in a crowded market place via effort-saving features such personalized product suggestions, 1-Click ordering and Collect+.
Finally, in some cases customer effort is used as a means to differentiate service between customer value segments. Airlines such as Virgin Atlantic offer effort-saving perks such as priority check-in and boarding and lounge access to high value customers as a means to incentivize their loyalty.
The relevance of customer effort and the threats and opportunities it presents differ from industry to industry. In some cases customer effort reduction need not be a priority, but generally that requires real strength in other aspects of your value proposition. Where the race against the competition is tighter, customer effort reduction can provide a useful lever by which to differentiate and gain an advantage. Whatever strategy you adopt, the key is to do so only after thinking critically about your competitive analysis and testing your assumptions.
For more information on this topic and how you can start reducing customer effort in your organization see our new White Paper “Is Your Company Worth The Effort?”