Customer LoyaltyCustomer Loyalty Measurements

Are you measuring your business’ Customer Effort Score (CES)?

A few weeks ago, we have talked about NPS (Net Promoter Score) as the de facto standard for measuring Customer Loyalty.

In 2008, the CCC (Customer Contact Leadership Council) a division of the Corporate Executive Board (CEB is now part of Gartner) created the Customer Effort Score (CES), as a better alternative to NPS. CCC believes their CES metric to be both a better and more predictive method of surveying customers.

CCC made a quite extended study of 75,000+ customers who have had an interaction with customer service via all possible communication/ contact channels (e.g. phone, email, chat, etc.), and they performed literally hundreds of structured interviews with customer service leaders worldwide.

FYI, this study of the 75.000+ customers, was based on getting answers to the following 3 questions:

  1. How does customer service affect loyalty?
  2. Which customer service activities increase loyalty and which do not?
  3. Can companies increase loyalty without raising their operating costs?

 

What is CES?
The idea behind CES is to ask your customer how much effort s/he put into a certain interaction with your company; for example, during a technical support call or during a visit at a Customer Service Department that s/he needs to do in order to resolve a billing problem or simply exchange a merchandise.

 

CCC/ CEB research showed that “Service organizations create loyal customers primarily by reducing customer effort – i.e. helping them solve their problems quickly and easily – not by delighting them in service interactions”.

According to CCC/ CEB’s findings:

  • if customers are forced to put forth a high effort, they are 96% more likely to be disloyal,
  • only 9% of customers with low effort are more disloyal.

So, the original CES single question in 2010 was: “How much effort did you personally have to put forth to handle your request?”, with an answer- rating scale starting from 1 (very small effort) and going all the way up to 5 (very big effort).

Due to problems with interpretation consistency, universal applicability, and cross-industry benchmarking capabilities, in 2013, CCC/ CEB came out with an improved CES version. CES version 2.0 is based on the statement: “[Name of the organization] made it easy for me to handle my issue”customers are asked to express their level of agreement/ disagreement with this statement on an enhanced seven-step scale from 1 (Strongly disagree) to 7 (Strongly agree).

For course in practice, different businesses use their own variation of the CES- scale (e.g. from 1 to 3 or from 1 to 7 or even to 9) and rephrasing of the question/ statement.

NPS and CES are complementary measures

When comparing the NPS and CES score, research does show that indeed these scores correlate with each other:

  • customers that indicate they had to make little efforts to fix a problem, also tend to give a high NPS.

However, it might be a great idea to utilize/ use both of these 2 measurements in every single survey, since:

  • NPS gives you a picture of your customer satisfaction on an overall level, and
  • CES specifically indicates how you perform in handling customer issues.

 

The Business Case with CES
Case studies of companies using CES (e.g. British Telecom) have found that “it has helped to:

  1. Demonstrate project success – Decreasing effort scores highlight the effectiveness and success of certain changes.
  2. Influence rep behaviours – As reps understand the importance of effort, they focus more on experience engineering.
  3. Detect process fixes – Identifying specific call types with unusually high effort scores can indicate potential areas for process improvements.”

 

Studies have also shown that customers who exert “high” effort (4 or 5 on the CES scale) are:

  • 61% less likely to repurchase and
  • 23% less likely to increase spend with an organization – as compared to the average customer.

We suggest that you use existing data regarding the percentage of customers who renew contracts annually or your general customer churn- rate to get an average repurchase rate, and then figure out the expected loss in repurchase from high effort customers specifically

Another equally quite interesting and surprising field- study result is that:

à89% of the interviewed customer service managers bet on “exceeding customers’ expectations” and very disturbing that

à84% of customers felt their recent interactions “did not exceed their expectations.” Simply put: there is little correlation between satisfaction and loyalty.

With BT in particular, we found that the rate of customer loss or easy scores was found to be significantly less than others and showed a 40% reduction in the propensity to churn. If you’re easier to do business with your much more likely to stay, essentially. We also found that in B2B companies, too. Being easy to do business with prevented customer defections and they’re more likely to stay.”

Finally, according to published studies, CES 2.0 should be 1.8 x better at predicting customer loyalty than Customer satisfaction (CSAT)and 2 x finer than Net Promoter Score (NPS).

Suggested CES Success KPIs

  • Total # of requested CES feedback
  • Total # of collected CES feedback
  • % of collected feedback from total feedback requests
  • Percentage- distribution of feedback on CES scale (1-7)
  • …..

 

CES Criticism
There is plenty of criticism and it’s all about the fact that CES is solely focused on the effort or effortless customer experience during the resolution of an issue. Sure, it is great if you are benchmarking the efficiency of your Customer Service. But, it does not tell you absolutely nothing about the customer who had no problem or who decided not to contact your Customer Service.

Also, you cannot get any type of ‘customer segmentation’ data/ information when using CES.

 

What is the Best Customer Effort Score / Value?

We hear/ get this question a lot from our clients.  CES is not an absolute ‘value’/ metric like NPS.

Also, everybody has the freedom to implement their own version of CES in their organization, so there is no Universal Benchmarking.

What is important, is that you define the CES zero-line for your own organization and that you start measuring (hopefully) improvement in your Customer Service areas and you manage to correlate that to specific actions taken to for improvement.

In Conclusion
Implementation of Customer Effort Score will definitely help you improve Customer Loyalty, by knowing how much effort your customers must put into resolving their problems.

Basically, you will have your customers pinpointing your attention right to the shortcomings of your service or product.

CCC/ CEB believes that a low effort customer experience is the cornerstone of customer loyalty. Do you believe that too?

Still, keep in mind that in the 75.000+ customers’ study, 89% of the Customer Service Manages felt/ bet on exceeding expectations, while 84% of those 75.000+ customers felt they their expectations were not met!! a simple binary question like ‘was it easy for you to resolve your problem today?’ (you don’t have to use ‘verbatim’ that very expression/ sentence)

 

 

Thank you and Good Luck w/ your CES implementation. Remember, it can also be

© 2018 Kweku Abedi & Spiros Tsaltas and © 2018 HireLoyalty