Reducing Customer Effort – the hidden key to reducing customer churn in the retail industry
1st March 2013 - Keith Pearce, Vice President, Solutions Marketing, Genesys, explores one of the great marketing conundrums – how to generate competitor customer disloyalty while retaining your own customer base. He suggests that retailers should radically re-think how to gain and increase customer loyalty – particularly when competitors selling similar products are now but a click of the mouse or tap of the iPhone away. He argues that diverting some of their efforts from expensive, complicated loyalty schemes to getting the basics of customer service right will have a positive impact on top-line revenue.
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Companies seem adept at chasing new customers while watching the churn. Why else would they spend around $500B on advertising and acquiring new customers, $50B on CRM spend, and just $9B on the call centre (Ovum)?
It seems that retailers are content to pour funds into loyalty schemes, money into advertising lower cost products, and then sitting back and watching the customer churn. They set out to attract new customers with price incentives while often leaving existing customers on the receiving end of poor customer service – and the churn continues.
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. The most recent research from PricewaterhouseCoopers 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.
Building loyalty is easier than you thought
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.
Tools are now available that help to measure Customer Effort, enabling organisations to identify and potentially eliminate which particular aspects of a customer’s experience are causing the most problems, rather than wait until a particular service problem actually occurs.
Build your individual Customer Effort Index
Genesys has 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.
Customer Effort Audits allow retailers to start to understand the customer experience from the customer’s point of view, identify which areas in particular are requiring too much effort and address these issues. They can then generate a Customer Effort Index that can be used to assess the magnitude of the effort needed to complete a request. 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.
The bottom line? Grow your top-line
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 building a truly great customer experience that leaves all of their customers confident to return.
New technology is allowing new customer service disciplines to build a happier, more loyal customer base that will keep coming back, refer more and buy more. With customer frustrations eliminated and expectations met, the impact on top-line revenue could be significant.