Beyond customer effort score - The four flavors of customer loyalty

Matt Dixon

March 26, 2019

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The Customer Effort Score is today considered one of the three major CX metrics (along with NPS and CSAT) that organizations track. It's certainly exciting and gratifying to see the concept of effort reduction taking hold of the market. But, the one thing that troubles me is the way I see companies going about the task of reducing customer effort. Namely, it seems many organizations are exclusively focused on “chasing the number” of CES rather than trying to understand what’s really driving it. That's why we created the four flavors of customer loyalty.

While CES is a powerful tool to help organizations track effort and spot at-risk customers, like any CX metric, it’s just a number and an exclusive focus on the number can mean that leaders miss the bigger picture story behind the number.

To help explain, I’ll use a simple, but powerful, framework that my colleague Ted McKenna created recently.

The four flavors of customer loyalty

Think of customer loyalty in two dimensions. On the one axis, you’ve got “stickiness of the brand/product,” ranging from low to high. Stickiness gets to how embedded is the product in the customer’s life, how hard it is for a competitor to dislodge. On the other axis is the “effort of the experience,” ranging from high to low.

four flavors of customer loyalty tethr old graph

To be clear, some products offer only “captive stickiness” to their customers—that is to say, customers would switch if it was easy…but it’s not easy to switch, so they end up staying. Of course, there is “willful stickiness,” too—for products so compelling and valuable that customers stay by choice. Even if another option comes along, the customer is so in love with the product that they stay.

The upper left represents those companies that earn customer loyalty strictly as a result of the easy experience they offer. For me, this is my neighborhood grocer. Candidly, Whole Foods and Trader Joe’s offer a far better product and brand value proposition—better selection, better prices, you name it. But, my neighborhood store is right there. The parking lot is never crowded and you can get in and out of the place quickly. So, I keep going there.

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The bottom right is for products that are hard to use but are nevertheless compelling and sticky (e.g., the German luxury car I had a number of years ago that was awesome to drive but a pain to maintain) or customers who feel captive to a company and, despite the high level of effort they deliver in the customer experience, switching is just too costly or too much of a pain. I’d put my bank and my airline in that latter category. My bank is a pain to do business with—especially when things go wrong. I remember being in Mexico on vacation with my wife and being on hold for more than an hour because they shut off my credit card, suspecting fraud. And, their digital banking capabilities are way behind that of other financial institutions. But, my paycheck is direct deposited there, there’s a branch down the street and they have ATMs all over my area. And my airline…I’m a top-tier customer…but I still get treated like everybody else. That said, all of my miles are with them and I’m so close to hitting a million miles, which will earn me elite status for life.

The top right is obviously the holy grail. There are certainly some companies for whom most of their customers would put them in this box because they deliver an incredibly sticky product or brand and a low-effort experience. I can think of only a few companies that fit this category for me: Apple and Amazon come to mind. For me, Amazon Prime is a great example—it’s so incredibly easy (especially when things go wrong) and phenomenally sticky and woven into my life. Honestly, Jeff Bezos could increase the cost by 3X and I wouldn’t even look at the bill.

Death zone warning signs

But for companies on the effort reduction journey, we recommend that the first thing they do is not to come up with a plan to shift to the top right, but to eliminate the bottom left from their value proposition. The bottom left is the death zone, the lose-lose box of customer loyalty—the worst of these four flavors of customer loyalty.

How you identify these customer situations so that you can act quickly to remediate and learn from them has always been a challenge for companies. Historically, organizations have relied on surveys to help them spot these trouble spots. But, given their low response rates, surveys fail to capture many at-risk customers until much later, after customers have already churned and publicly aired their grievances. Even a highly negative response to the CES question on a survey won’t tell the whole story here.

At Tethr, we’ve trained our machine learning platform to pick up the warning signs that a customer may be in this “lose-lose” box. As with any new training set, we started by listening to calls that were the worst of the worst. If you take out the colorful language, what you find is pretty fascinating.

Time is of the essence when it comes to customer loyalty

The recurring feeling in all of these calls was that the customer just felt like the company was wasting their time.  This goes well beyond simple effort drivers like repeat contacts, channel switching, transfers or repeating information. And it seemed to be something more concentrated and dire than customer anger, frustration, confusion or any other sentiment we’d detected previously in our efforts to teach our machine to understand and identify sources of customer effort.

We gave a name for this new category: reoccurring effort. But even that doesn’t fully capture the depth of what’s going on here for a customer. It’s not just that the experience itself is high-effort. It’s that it feels to the customer like their relationship with the company is just one horrible high-effort experience after another. And, to make matters (far) worse, the product and brand aren’t compelling, differentiated or sticky—which makes the fact that the experience is so high-effort that much worse.

When you listen to these calls, they are like train wrecks. You can hear the anger and vitriol oozing through the call. For one cable company we work with, we heard a customer spend 15 minutes—barely keeping his cool—explaining to a rep who started the call by asking the seemingly innocuous question, “How can I help you today?” that he’d already spent roughly 12 hours combined trying to fix the issue he was having with his wireless router. He spent hours on the company’s website. He went to the router manufacturer’s website. He went to YouTube and various online support communities. He had called a half dozen times over the course of three days reexplaining his story every single time he called. “YOU GUYS ARE WASTING MY TIME,” he seethed, and then went on to threaten cancelation, move to a competitor (whom, he noted, offers the same internet speed for less per month), and to tell everybody he knows not to do business with this company.

Chronic suck, anyone?

We shared it with one CX leader at the company who came up with a better description: chronic suck. In many ways, it seems appropriate. It’s the sum total of what you get when you mix an extremely high-effort experience with a dangerously low level of product or brand stickiness.

When we took completed surveys from this company and paired them up with customer voice data, we found that reoccurring effort—when you combine it with other sentiments that tend to co-present (namely, frustration and churn mentions) drove a 31 percent increase in the likelihood of an NPS detractor score. And, unfortunately, there was a significant number of interactions that fell into this category…which means not just losing those specific customers, but leaving them in a state where they want to go out and tell the world about their horrific experiences.

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What's more, reoccurring effort happens often enough that it's a real issue for most companies. For one wireless carrier we work with, we took a random sample of 50,000 sales-related calls and found that reoccurring effort appeared in roughly 2,200 calls (4.4 percent). That's 2,200 customers who are likely not only to churn, but to spread negative word of mouth about the company to friends, family and coworkers.

Where do you fall on this scale of the four flavors of customer loyalty? Do you know where your customers would place you on this grid? And, more importantly, do you know why? We can help you get the answers you need. Contact us today.

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