Measuring the key drivers of customer retention and loyalty is a key focus for organisations seeking to refine their knowledge on how transactional experiences are driving critical outcomes. Enter the Customer Effort Score: a leading indicator of consumer loyalty based on the interrelationship between customer effort, expectation and loyalty.
How the Customer Effort Score works
Quite simply, when customers have to expend more effort than they expect, they leave. The Customer Effort Score measures this and is based on responses to the question, “How much effort did you personally have to put forth to handle your request?” The Customer Effort Score was presented in a 2010 Harvard Business Review article by Matthew Dixon and colleagues who argued that rather than focusing on finding ways to exceed customer expectations as a way to build loyalty, companies should focus on making it as easy as possible for customers to resolve issues and get what they need. It is scored on a scale from 1 (very low effort) to 5 (very high effort).
Minimal effort, maximum reward
In a world where time is money, understanding that your customers are busy and finding ways to minimise their effort will prove to reap the maximum reward. For example, if the leading driver of your customer experience is an e-commerce website and people are having trouble logging onto your website, they will simply take their money elsewhere. With businesses operating a multiple of service channels, navigation requires that any potential roadblock to be removed.
There is also a link between expectation and effort and when it comes to the Customer Effort Score, the second question, “How did this effort compare to your expectations?” can further provide much-needed context. e-Commerce customers do not expect to spend much energy logging in, so that expectation has proven to frame the effort. If your customer expects a transaction to take little effort, but instead it takes a lot, you are at risk of losing their business; alternately, if they expect high effort, and the transaction is effortless, they will reward the company with their continued business.
The Customer Effort Score and customer satisfaction
The predictive power of the Customer Effort Score is highly impressive, with the authors’ research suggesting with 94% accuracy that those customers expending low effort will repurchase a product or service.
In addition, when measured against other customer experience metrics, the added value that the Customer Effort Score brings is that it is transaction-based and thus much more actionable. If your organisation has a poor Customer Effort Score you know immediately that you have to focus on ways to make it easier for customers to get what they need.
Loyalty has much to do with how a company delivers on their plain-vanilla services and less on the added sprinkles and toppings. Satisfaction comes when you help your customers solve their problems. Framing service challenges in this way can therefore be highly illuminating, especially for companies that have been struggling to deliver on the cherries and frosting.
If you’d like to find out more information about the Customer Effort Score and what it can do for your organisation, please contact us for further information.