In most instances organizations have found that whilst the cost to serve is rising, churn rates have plateaued, and acquisition objectives seem impregnable
When your CX professionals use language like “delighted consumers elated with their frictionless experience” you need to be immediately alarmed. You can be almost certain that your CX efforts are being ideologically driven by conscientious, hardworking and vocational colleagues who rise each morning believing that their efforts will result in a better outcome for the customer and therefore, the organization. However, despite organizations embracing customer centricity and the requisite increase in investment, in most instances management has found that whilst the cost to serve is rising, churn rates have plateaued, and acquisition objectives seem impregnable.
Setting out to delight customers just needlessly raises costs. Efficient service brands seek to broadly match customer expectations and distinguish themselves on just one or two “heavy-hitting” service attributes. These attributes are - empirically identified and validated - behavioural drivers.
There are two sure fire signs that you are wasting your CX investment:
- Setting objectives for customer experience above eight (on a scale of 0-10)
- No objective process for killing zombie CX initiatives.
Setting and Meeting Expectations is Smart
Shooting for a performance score above eight (on a scale of 0-10) for customer experience almost always results in diminishing returns. The reason eight is ‘the answer’ is because it is generally the average expectation of customers (based on many million Forethought calibration responses – independent of culture, race). Please ask your CX folks to run a simple cross tabulation and plot the curve. That is, cross tabulate customer satisfaction or customer advocacy with a business outcome question such as intention to remain. Brace yourself for a classic display of the law of diminishing marginal utility. Now ask yourself, should a score of eight be your ceiling performance score? And, putting aside the herd instinct, what is the empirical justification for exceeding eight? Or for that matter, getting more NPS Promoters?
One client from one of Australia’s largest corporations has made an artform of managing expectations and matching it with service performance – Exhibit 1. When expectations are rising, the executive works to lower expectations by communicating the service proposition to customers. As part of his arsenal, the executive periodically commissions the development of explanatory models to identify the drivers of customer satisfaction, and then sets KPI’s to maintain the alignment between performance and expectations on those drivers. In his 15 years of running this business, the executive has consistently achieved above system growth.
Exhibit 1. Matching Performance (Overall Satisfaction) with Expectations
Just as exceeding expectations is foolhardy, so too is falling beneath expectations.
The Royal Automobile Club of Victoria (Australia) is a motoring club that provides, amongst other services, roadside assistance. Stranded motorists are given the predicted arrival time of a patrolman in 20-minute slots. The moment the patrolman arrives is automatically captured. This is a perfect example of measuring performance against expectations. The satisfaction scores are compared in Exhibit 2.
Exhibit 2. Average Satisfaction with Patrolman’s Time of Arrival
The penalty of failing to meet expectations impacts retention and business outcomes far more severely than it impacts satisfaction (Exhibit 3)
Exhibit 3. Impact of Expectations on Likelihood of Retention
In summary then, just aim to meet customers’ expectations. Do not fall too far beneath expectations because it will impact retention, but do not strive to exceed expectations because it will just needlessly set in motion the expensive treadmill of trying to satisfy rising expectations. Once this lesson is learnt, the organization should understand the importance of managing expectations and indeed, understand that lowering customers’ expectations may actually be a legitimate organizational goal.