Why Companies Are High Maintenance to Customers (but Don’t Know It)



Businesses are losing more than they know because they inconvenience customers. Such negative customer perceptions result in lost opportunities in revenue growth, tarnished branding and smaller profit margins, according to a study.

“Direct experience is one of the leading contributors to a customer’s impression of a brand and the likelihood that they’ll be a fan or a detractor, says Mark Wilson, the chief marketing officer at Avaya (www.avaya.com).

Avaya’s “Customer Effort Impact,” survey in 2013 highlights how the amount of work a customer exerts to obtain service affects business priorities of revenue and market growth, brand loyalty and operational margins.

ID-100225188 Witthaya Phonsawat“Companies need to test the service experience at every point in the customer journey to see how much effort it requires and whether it supports their brand objectives and business priorities,” he adds.

The study’s results show some eye-opening reminders – companies are asking customers to jump too many hurdles for the service they desire.

Poor customer service experiences often lead to additional costs and labor – such as channel escalation for resolution and multiple employees’ involvement — to resolve the issue.

Customer perceptions are shaped by the amount of effort required to obtain service.  Repeated, high effort experiences are more damaging to brand and revenue growth than good experiences are helpful.

Sixty-six percent of customers, Mr. Wilson say, are likely to leave a company after high effort experience.

(Agreed. The 66 percent figure parallels my research, which shows 70 percent of customers will buy elsewhere if they feel taken for granted.)

Customer needs and company objectives often appear to be at odds when it comes to the customer experience. Consumers seek excellent service across all divisions of the company.

But companies look for revenue and market growth while controlling costs and increasing efficiency.

Companies need to define efficiency from the customer’s point of view, simplify the effort required and optimize each interaction for an engaged, long-term relationship that multiplies customer lifetime value.

High effort vs. low effort experience

Customers appreciate an experience that is low effort and efficient, according the results:

  • 87 percent of respondents rate the customer service agents’ knowledge of a product or service as important to their ongoing experience with companies with 68 percent saying it is very important.
  • 83 percent rate friendly, engaging customer service reps as important to their ongoing interactions and experience with companies with 33 percent saying it is very important.

Conversely, companies can’t risk a customer having a bad experience at any point in the customer lifecycle, whether it is during the point of sale or during a service appointment. The survey emphasized high-effort activities that can significantly worsen the perceived customer experience.

Customer perceptions are shaped by the amount of effort required to obtain service. Repeated, high effort experiences are more damaging to brand and revenue growth than good experiences are helpful.

High-effort activities include:

  • 64 percent of respondents cite the need to repeatedly contact a company to resolve an issue requires high effort.
  • 62 percent indicate that inability to reach a human to get an answer to complete a transaction creates a high effort.
  • 59 percent cite interacting with company representative who lack knowledge of product/service as contributing to a high effort.
  • 56 percent cite lack of follow up by company representatives to provide an answer or complete a transaction as high effort.
  • 52 percent cite being transferred between staff or departments to get an answer or complete a transaction as requiring a high effort.

What’s at stake: Customer lifetime value  

Several studies have focused on the upside of good customer service, which are reinforced by the findings of Avaya’s study. The service experience plays a crucial role in shaping consumers’ buying decisions, long-term loyalty and whether they recommend – or do not recommend – companies, products and services.

While putting an exact figure on customer lifetime value is dependent on each company, a good experience will contribute to the long-term revenue and market growth that are consistently among the top company priorities.

More results:

  • More than 75 percent of respondents state they are likely to continue spending money as a result of an exceptional customer experience with 63 percent indicating they would be extremely likely to continue.
  • But 82 percent of respondents are likely to stop spending money with companies as a result of a bad customer experience, with almost half saying that it would extremely likely to stop.
  • More than 50 percent say they would pay more to companies that provide consistently customer service. Twenty-one percent of respondents say they would pay 10 percent more to a company they felt provided good customer service.
  • 82 percent say an existing relationship with a company is important or very important when making a purchase demonstrating the likelihood of repeat business that grows brand and revenue.

More than 2,100 U.S.-based adults (18+) participated in the survey conducted by Harris Interactive on behalf of Avaya.

From the Coach’s Corner, editor’s picks for related reading:

Want More Business? Build Trust with Consumers…Here’s How – With consumers trying to cope with information overload – you will increase sales with long-term customer loyalty – if you build trust by using best practices. It may be an obvious approach, but it’s confirmed by a 2012 study that shows 84 percent of the respondents declared trust must be warranted before they buy.

Your Supply Chain Can Meet the Expected Standards of Customers, If…  — A company that fails to meet customer expectations on store inventory and delivery has problems in supply chain management. Such a company minimizes its profits. Worse, it’s a red flag about competitiveness and long-term sustainability.

Profit Drivers – How and Why to Partner with Your Employees – If you want maximum profit, consider partnering with your employees. “Key employees – in fact, all employees – will be more valuable to a company if they understand what drives profit and improves cash flow for the business,” says leading financial consultant Roni Fischer.

How Retailers Can Improve Operations for Profits – Many retailers could turn their operations into higher profits, if they do a better job of utilizing their customers’ data according to a study. That includes adequately learning insights by better engaging their employees who deal with customers on a regular basis.

Energize Your Customer-Loyalty Program with 6 Steps – The quickest way for established businesses to optimize revenue is to have a stellar customer-loyalty program — there are six steps you can take for repeat sales and referrals. If you’re not a great steward of your current book of business, it’s futile to look for new customers.

Why Your Customers Stay or Leave – Insights from Study – Despite all the emphasis on speed in customer service, it’s not the salient factor in keeping customers happy. A study confirms that the power of emotion is most important, according to a January 2013 published report in QSRweb.com.

“Customer satisfaction is worthless. Customer loyalty is priceless.”
-Jeffrey Gitomer


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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.





Photo courtesy of Witthaya-Phonsawat at www.freedigitalphotos.net

Seattle business consultant Terry Corbell provides high-performance management services and strategies.