Less 'customer effort' means less churn

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By: Wise Marketer Staff |

Posted on February 27, 2013

Retailers now need to radically rethink their plans to gain and increase customer loyalty, particularly with competitors selling similar products being a click of the mouse or a tap of the tablet away, according to Keith Pearce, vice president of solutions marketing for Genesys.

Pearce argues that by diverting some of their efforts away from complicated loyalty schemes and toward getting the basics of customer service right, retailers can make a positive impact on top-line revenue.

Companies seem adept at chasing new customers while watching their existing ones churn. Why else would they spend - according to research by Ovum - some US$500 billion on advertising and acquiring new customers, US$50 billion on CRM, and only US$9 billion on the call centre? It seems that retailers are currently content to pour funds into loyalty schemes and advertising lower cost products, while sitting back and watching the customer churn.

Most retailers, from big players to medium sized chains, have the technology to put in place loyalty schemes and many do. These schemes certainly enable them to gather information about customers' buying habits in order to market new offers to them and run operations more efficiently and profitably. But consumers' wallets are overflowing with an excess of loyalty cards for different retailers, none of whom actually has their loyalty.

It seems that customer loyalty can't be bought; it has to be earned. Recent research from PricewaterhouseCoopers (PwC) found that consumers ranked loyalty programmes last when asked to rank factors influencing purchase decisions. Furthermore, the research found that 72% of consumers are unwilling to re-purchase from retailers which fail to resolve their issues. To stop the churn and nurture loyal customers who return time and again, it's great customer service that is key.

An organisation's contact centre is often seen simply as a tick in the 'customer service' box, and not as a means to actively improve the customer's experience and reduce customer effort. But the retail industry is a prime example of where truly great customer service can drive loyalty and generate revenue.

So how can your contact centre help you keep customers coming back for more? Well, loyalty has more to do with delivering on basic promises than it does with consolation gifts. It is all about making it easier for customers to resolve their issue or query at the time; in other words, reducing the customer's effort when they have a sales query or when something goes wrong. Increasing customer effort not only decreases customer satisfaction, but more importantly, decreases both customer loyalty and future spend. Dissatisfied customers look elsewhere for the same product.

Buyers are benefiting from the explosion of mobile and e-commerce technology that means comparisons of stock, comparison of prices, and delivery times for products, are a mere tap of the iPad screen away. Sellers need to exploit a new generation of customer service technology in order to reduce customer effort and to maintain the loyalty of the ones they have already attracted.

But tools are now available that help to measure 'Customer Effort', allowing marketers to identify and potentially eliminate the particular aspects of the customer's experience that are causing the most problems, rather than wait until a particular service problem actually occurs.

Genesys has itself developed a Customer Effort Audit that measures a series of interaction parameters- number of extra contacts, number of channels used, interaction durations, transfers, resolution lapsed time and total conversation time. It then scores them according to the priority given to the interaction, which varies from market to market and individual to individual. It's important to not only count the events, but to also weight their impact based on how each affects the customer, as some events can have a multiplier effect in their impact. These audits allow retailers to start to understand the customer experience from the customer's point of view, and to identify which areas are requiring too much effort, and then to address those problems. Understanding this enables retailers to start to eliminate frustrations from their contact centres and use them as a positive force for revenue retention - and revenue generation.

Retailers are beginning to recognise that customer loyalty is increasingly a key differentiating factor between a sale or a non-sale. There is a strong case for them to divert some of their spend from loyalty schemes and sales incentives into creating a significantly better customer experience that leaves all of their customers feeling happy and confident to come back again and again. And, with customer frustrations eliminated and their expectations met, the impact on top-line revenue could be significant.

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