Sometimes, providing exceptional customer experience (CX) is all about preventing customers from becoming more disloyal rather than creating raving fans. It may be odd to think about customer retention this way, but that's what happens when your customers expect
effortless customer service. For many customers, meeting these expectations means a business is just doing its job—nothing very special in that. On the flip side, not meeting those expectations can be disastrous for a relationship.
Let's look at a couple of examples that illustrate my point.
Alan: Alan just received a $1,000 cable bill for the month of January. His usual monthly cable bill is $150, and January's bill has no explanation for why it's so high. He visits the cable company's website, where he chats with a live agent, but decides he'd rather talk to someone on the phone. When he calls customer service, he must repeat his issue to the phone agent, only to be informed that he called the wrong department. Upon being transferred, Alan again must repeat his issue. Fortunately, this agent can solve the problem, but the whole transaction took 90 minutes and too much effort. Alan vows to find a new cable provider and spends a good part of his evening trashing the company on Facebook and Nextdoor.
Sydney: Sydney has a very different experience than Alan. When she receives a damaged product from an online retailer, she begins her resolution journey by chatting with a live agent. When she decides she needs to speak to someone on the phone, she's routed to the same agent she was chatting with. Because the agent already knows Sydney's information, he can quickly resolve the issue. This low effort transaction takes less than 10 minutes, and while Sydney is satisfied, it doesn’t really boost her customer retention likelihood. In her opinion, the business was just doing what she expected of them.
As you can see,
customer effort is important to customer retention, but maybe not in the way most people think. In this world of high consumer expectations, effortless resolutions may have become table stakes. The absence of effortless experiences is what has the greatest impact on customer retention.
Let's take a closer look at this concept.
What is customer retention and why is it important?
Customer retention is a measure of the rate at which customers continue doing business with a brand for a given length of time. Retained customers make repeat purchases, so customer retention rates are ultimately an indicator of how well businesses capture value from their customers, influence them to buy more products, and foster loyalty.
Customer retention is important for a number of reasons. For one thing, retaining an existing customer is typically less expensive than attaining new ones. Additionally, loyal customers are inclined to make more purchases, pay a premium for products, and refer friends and family to a brand.
All of this has a positive impact on the bottom line. For example, Bain & Company found that in the financial services industry a 5% increase in customer retention produces more than a
25% increase in profit.Additionally, according to an article in Harvard Business Review, loyalty leading brands grow their revenue roughly
2.5 times as fast as their industry peers.
It shouldn't be a surprise that high customer retention rates are a competitive advantage. Now let's look more closely at the relationship between customer retention and customer effort.
How does customer effort impact customer retention?
I mentioned earlier that low customer effort is more likely to prevent disloyalty than it is to substantially increase customer retention. This idea is backed by research. For example, at a macro level, a customer service interaction is
four times more likely to create a disloyal customer than a more loyal customer.
[1] This highlights the fact that contact centers always need to be on their game in order to prevent customer churn.
Drilling down a level, Gartner found that, "
Ninety-six percent of customers with a high-effort service interaction become more disloyal compared to just 9% who have a low-effort experience." Making customers work too hard for resolutions is bad for customer retention.
High effort customer service experiences also result in high word of mouth complaining. For example, Gartner reports that
81% of consumers who experience high effort support will tell friends and family about it, compared to 1% who have effortless experiences. It's typically the bad experiences that are remembered and discussed.
Customer effort has such an impact on customer retention that it's a top predictor of loyalty. In fact, Gartner reports that it's
40% more effective than customer satisfaction at predicting customer loyalty.
What makes customer service ‘high effort’?
There are many things that can make customers work harder than they should. Today's resolution journeys are complex because they typically consist of multiple touchpoints and handoffs, each of which represent a potential source of friction that customers need to overcome.
Let's revisit Alan's experience to look at some of the things that create high effort customer service experiences.
Use of multiple channels within the same interaction
When a customer uses multiple channels, he will need to exert more effort if the business doesn't have
omnichannel capabilities. When Alan switched from online chat to voice support, it was an awkward transition that caused Alan to do more work. In contrast, Sydney's handoff from chat to phone was seamless, illustrating that using multiple channels doesn't have to be a high effort experience for customers.
Not being routed correctly the first time
Ineffective routing usually results in transfers, and makes customers put forth more effort. In Alan's case, the transfer resulted in more work for him because he had to repeat the details of his issue. Not only did he have to work harder to get his issue resolved, but repeating himself multiple times was highly aggravating. In fact, any time a customer is required to repeat the same information it creates a higher effort experience.
Other factors that create more work for customers include:
- Not resolving their issue during the first contact
- Agents with poor listening comprehension skills
- Inflexible policies and processes
- Ineffective (or no) self-service tools
- Poorly designed IVR menus
How contact centers can decrease effort and strengthen customer retention
There are many tools available to help contact centers decrease effort and strengthen customer retention (or at the very least, not harm it). The following solutions should get businesses closer to these goals.
Technology
Although not all the solutions rely on technology, having the right software capabilities can make things much easier for customers to receive support. Here are a few options.
Omnichannel capabilities
Alan probably wouldn't have become a customer retention problem if the company he was doing business with had omnichannel capabilities.
Omnichannel solutions enable customers to move seamlessly across channels, mainly by sending their data with them. When this data is available to agents and self-service tools, customers don't have to repeat themselves, which creates a low effort experience.
Like Sydney from the example, most customers expect omnichannel experiences. In fact, our research revealed that
96% of consumers expect companies to make it easy to switch channels without the need to repeat information. However, 68% of consumers say businesses are doing a poor job with omnichannel. That means many businesses are putting customer retention at risk by not meeting expectations.
Smart self-service
Smart self-service is a convenient way for people to solve their own problems, and we found that
81% of consumers want more of it. However, self-service solutions that are designed poorly or used for the wrong interaction types can actually increase customer effort and disappoint users. To ensure their
self-service tools are as effortless as possible, contact centers should leverage artificial intelligence, include a seamless path to an agent, start small and grow, and be realistic about their capabilities and limitations.
AI routing
Routing customers to the right place the first time is a critical component of providing low effort customer service. Proper routing eliminates many of the transfers that can tarnish an experience.
AI routing is smart, data-driven routing that greatly increases the odds that customers will be matched with the right agents on the first attempt. Plus, it's smart enough to match customers to agents based on factors such as sentiment and preferences, which leads to a more personalized contact center interaction.
Trained agents with good listening skills
A competent agent with great listening skills can make an interaction seem effortless. Strong listening comprehension skills enable agents to quickly understand the issue and get right down to problem solving. Unfortunately, listening comprehension and active listening skills are typically not taught in schools, but that doesn't mean agents can't learn them. Businesses should invest in training so that agents have the listening skills required for low effort resolutions.
Include first contact resolution (FCR) and customer effort score (CES) in your top KPIs
Businesses that are focused on customer retention should ensure their key metrics are aligned on improving retention.
One way to do that is by ensuring contact centers are managing effort-related metrics. For example, first contact resolution rate can have a significant impact on customer effort, so that should be measured down to the agent level.
Additionally, contact centers should measure customer effort by surveying customers immediately following support interactions. By asking customers a question such as, "To what extent do you agree or disagree with the following statement: The company made it easy for me to solve my problem," and having customers rate the statement on a seven-point scale, businesses can calculate a
customer effort score that can be used to track progress and identify opportunities.
One of the many good things about reducing customer effort is that it often reduces agent effort as well. To learn more about this win-win phenomenon, watch "Best practices: Reduce agent and customer effort." Also,
explore our software solutions, which are designed to make interactions flow and reduce customer effort.
[1] CEB Global (now Gartner): The Effortless Experience: Conquering the New Battleground for Customer Loyalty
