Ok, I felt it, witnessed it, calculated it, preached it and now sophisticated and comprehensive research, studying more than 75,000 customers over several years, has provided absolute proof. Bells, whistles, fluff and items unrelated to actual problem solving do not create customer loyalty in the service business, and in fact reduce it! Whew, I feel better already.
The big duh
I’m flying on a Friday as usual and next to me a gentleman is reading an article from the July-August Harvard Business Review titled “Stop trying to delight your customers.” This obviously caught my eye and I immediately wondered if it was a “tongue in cheek” article whining about poor customer service. I peeked (since it’s impolite to stare) and began reading it. To my surprise, it was an expose on the ridiculousness of spending a massive amount of energy and money attempting to delight customers, rather than focusing all the energy on customer-centric solutions (you know, why the heck they contacted you in the first place).
A Corporate Executive Board’s (www.executiveboard.com) Sales and Service Practice team: Matthew Dixon, Karen Freeman, and Nicholas Toman set out to answer three important questions all businesses want to know: 1. How important is customer service to loyalty? 2. Which customer service activities increase loyalty and which don’t? 3. Can companies increase loyalty without raising their customer service operating costs? I loved it. Their findings included these critical conclusions. First, delighting customers doesn’t build loyalty; reducing the effort they need to make to get their problem(s) solved does. Second, acting deliberately on this exposed insight can help improve customer service, reduce costs, and decrease customer loss. Be still my heart.
They concluded, “Our research shows that loyalty has a lot more to do with the how well companies deliver on their basic, even plain-vanilla promises, than how dazzling the service experience might be. Yet most companies have failed to realize this and pay dearly in terms of wasted investments and lost customers.” The article also concludes that exceeding customer expectations by giveaways, refunds, and the like did little to create loyalty, and often did the exact opposite because customers calculated that transaction problems were so common, this reaction was the normal result – not particularly directed at them, but at a group situation.
Less is more
For two decades I have witnessed well-meaning and devoted manufacturers, dealers, managers, DMS providers, and vendors of all sorts, piling more and more non-essential “extravagances” and non-essential perks into the service department experience attempting to develop additional customer loyalty.
Result: The retention numbers aren’t improving for most, even with offers which feature forms of practically begging customers (saw $9 oil changes recently) to remain loyal. Meanwhile independent shop operators prosper with their rather “crude” method of doing business, which primarily features a ruddy front man with the interpersonal skills of a tollbooth worker. He or she just knows how to get vehicles fixed right the first time, for the right price based on the customer’s and the vehicle’s needs and realities. As highly educated mentors they “tell” customers what the right decisions are, they don’t ask, because they actually know what the best choices are! They have a loyal customer base because they deliver on the “basic” reasons customers purchase service – right on the target of the article’s conclusion.
The article noted that organizations focus on “exceeding expectations” and measure the result using customer satisfaction scores (sound familiar?). However, the study found very little relationship between satisfaction and loyalty. “Twenty percent of the ‘satisfied’ customers in our study said they intended to leave the company in question; 28% of the ‘dissatisfied’ customers intended to stay.” A key is teaching reps how to “make it easy” for the customer, remove obstacles and make every inquiry a one-stop transaction. Secondly, don’t just resolve the current issue, but head off the next one. Another key component is to arm reps to address the “emotional side” of customer interactions – tell customers what you can do, not what you can’t do – put a positive spin on every type of interaction. Two other key components to loyalty are empowering the front line with knowledge and decision-making abilities to decrease customer effort in problem solving. Geez, common sense, don’t you think?
The ripple effect
According to the study, customers influence others substantially when a service failure occurs. Forty-eight percent of customers who had negative experiences told 10 or more others, while only 23% of customers who had a positive experience told 10 or more people about it. Consider those statistics along with a recent study I read which revealed that over 75% of shoppers determined which dealership they would spend their money with based on Internet reviews! I guess knowledgeable consumers want to deal with knowledgeable employees – geez, panacea – who knew?
What about me?
Let’s apply these intuitive study results to the dealership service transaction. What items would decrease the customer’s effort and which items increase the customer’s effort? To begin with, visitors not getting attention quickly because some brilliant marketer calculated that telling 10,000 potential spenders that no service appointment was needed are a key to driving business – while all the surveys distinctly show that valuing the customer’s time was critical. How about this one, putting skill-less “advisors” on the front line who know nothing except “…. the charge for a technician to look at it is $$$ and I will call you back with an estimate later” (cause I don’t know diddley). So, the customer took the time to come in to get an answers, but leaves with absolutely nothing – more effort – smart.
Here’s a customer effort list: 1. Can’t find the service drive – park outside and seek an employee. 2. Don’t know who to see or what to do. 3. Stand in line. 4. Get no answers up front. 5. Told to purchase maintenance, but have no budget. 6. No pricing options, take it or leave it. 7. Asked to make decisions they actually know nothing about. 8. Not sure if pricing is fair. 9.Have to call to check on status-when will it be done? 10. Stand in line again. 11. Cashier doesn’t know details. 12. Can’t understand complicated repair order. 13. Have to decide about next service without information. 14. What about future tire purchase? 15. What benefits did I get from my maintenance purchase – car feels the same? 16. When will more maintenance be necessary? 17. Is there a better price somewhere else. 18. Can I talk to someone who is knowledgeable about my vehicle needs? 19. Who do I see the next time? 20. What if it isn’t fixed right, what do I do? 21. How much warranty coverage is there? 22. How do I make an appointment which works? Ugh.
What to do, Lou?
It makes sense to me for all of us to examine the amount of effort customers have to make in all of the dealership transactions; but especially in the service department. The article advises that the front line people have to be closely involved in helping determine where customer effort is located, and they can provide many solutions to make it easier to accomplish a transaction. Keep in mind that extra effort for the assistant service manager to do his/her job ends up requiring effort from the customer too. Case in point is the attempt to measure CSI with multiple questions at active delivery using poignant questions – additional effort for both parties.
If you are interested in getting this article, call 800-988-0886 and ask for Reprint R1007L – or you can just take my word for it and refocus on fundamental problem solving and reducing your customers’ efforts in doing business with you.