Are we working our customers too hard?
The spread of the global pandemic in the last 18 months has made us all reassess what really matters to us, and many of us have had to embrace new technologies and do business in ways that we couldn’t have previously imagined.
Digital solutions are being developed at an unprecedented rate. You can now use augmented reality to check that the new sofa you are about to buy from IKEA looks good in your living room and even more of our shopping can now be done online. In fact, e-commerce sales grew by over 30% in 2020 and Euromonitor estimates that 17% of goods will be bought online in 2021, nearly doubling from 2016. [F1]
So, while many companies have leapt at these new opportunities to make life easier and more instantaneous for their customers, what has become clear is that many organisations are still a long way from being ‘easy’ to do business with. In fact, many have regressed to a point where they are positively difficult!
For example, getting through on the phone to speak to a real person can be a challenge, and some people may find it harder to get a doctor’s appointment. It is therefore increasingly important for organisations, and particularly established organisations, to adapt themselves to new ways of doing business and ensure that they are ‘easy’ to do business with.
This paper examines what ‘ease of doing business’ means and what lessons can be learnt from companies using customer ease (CE).
The theory of customer effort
Customer effort research has been around since the 1940s, but it wasn’t until later that a Harvard Business Review [HBR1] article raised interest in how customer effort and, in particular, customer effort scores, could be used as an indicator of customer loyalty.
The research findings were convincing. In a survey of 75,000 business-to-consumer (B2C) and business-to-business (B2B) customers, they found that the customer effort outperformed the net promoter score (NPS) and customer satisfaction measures in predicting the power of repurchasing and the power of increased spending.
The article claimed that 94% of the customers who reported low effort expressed an intention to repurchase and 88% said they would increase their spending. Conversely, 81% of customers who had a hard time solving their problems reported an intention to spread negative word of mouth.
It was our interest in seeing how customer effort could be used to increase loyalty that motivated us to interview the companies featured in this report. However, in our research we have found that using ‘ease of doing business’ rather than ‘customer effort’ is more accessible and understandable, and more accurate results are achieved by asking the question: ‘How easy are we to do business with?’, we can assess this using a customer ease score (CES).
How to measure the CES
There is still much discussion about the relative merits of a binary feedback format (i.e. a simple yes/no answer) or a scaled response (i.e. ‘On a scale of 1–5, how easy was it to do business with us?’).
While there is no definitive answer to this, the learnings from a more detailed, scaled response, enables a degree of learning that is not possible from the binary feedback. Whichever method you choose, it is important to always ask a follow-up question if customers give you a low score or say you are not easy to do business with. A simple ‘I am sorry to hear that. Would you mind telling us why we are not easy to do business with?’ will suffice. The responses can then be analysed using text analytics.
In our research we have found that there are several advantages of using a CES over other measures such as customer satisfaction (CSat) or NPS. It provides actionable insight and it tells you what drives your customer mad. It drives advocacy, value for money and loyalty; it is applicable to all channels and all businesses, and it engages and resonates with staff.
So what is CE, and is it worth the effort?
We define CE as 'a customer’s perception of the amount of time and "energy" that they have to spend in an encounter with a brand/an organisation’. This is different from the objective amount of time and energy; it is the non-monetary cost of consumption.
An encounter with an organisation includes, but is not limited to:
(a) getting a product or service – purchasing
(b) getting information
(c) getting a problem solved – post-purchase, and
(d) actually using the product (e.g. Sky box, iPhone)
CE can be a global judgement or a judgement on a single encounter. Global judgement happens when a customer thinks about many encounters with a brand/an organisation.
Energy is effectively a cost and therefore there is both a trade-off and a desire to either minimise it or get ‘value for your energy’. This will, in turn, influence the perception of satisfaction and perceived convenience. For example, you may be prepared to put the energy into building some self-assembly furniture as it is cheaper than buying it already built.
Just as spending more money might increase the perception of value, as energy cost goes up, customers may also value the product or service more. They may also evaluate the product performance more highly, and have higher levels of knowledge, satisfaction and commitment to it. The satisfaction of mastering a difficult instrument like the bagpipes is likely to be greater than mastering the triangle – but the energy required for the former is infinitely greater than the latter and many may fall by the wayside.
Our research in the Henley Centre for Customer Management has found that there are four types of energy: cognitive, emotional, physical and time (CEPT):
Cognitive energy – the amount of mental energy required to process something. If things aren’t simple, there is too much uncertainty or there is simply too much choice, then cognitive energy use can be high. Consumers generally have a limited capacity to make decisions in the course of the day; this is particularly true for making mundane decisions where consumers don’t want to waste energy. However, when complexity is high, where there are numerous alternatives and/or where things are difficult to compare, advice-seeking occurs – in the form of ‘people like me like…’ decision tools, comparison tools or simply asking a friend.
Emotional energy – how much negative versus positive emotional energy is required. Anxiety, stress, anger, fear, boredom and frustration are all psychological costs related to emotional energy. These can be the result of:
• a problem with staff or other customers
• the inability to access the right people, processes or procedures
• complaints not being properly dealt with
• failures of technology
• feelings of personal risk in terms of safety and security
Physical energy – how much physical energy it takes to do something, such as lugging bulky goods around, having to walk long distances, having to physically go to the bank to verify identity instead of being able to do it through more convenient remote channels.
Time energy – how much time it takes to wait, consume and transact. Queuing is one of the things that commonly come up as a major issue where time energy is concerned.
These CEPT dimensions are related. For example, queuing time can increase emotional energy, cognitive energy requires time, and accessing a service that requires face-to-face interaction with a firm’s representative takes time and emotional and physical energy. All these dimensions can be used to design easier customer journeys after CE has been analysed and key drivers of energy have been identified from the data.
CE – the research approach
The approach taken by the Henley Centre for Customer Management research was to interview companies that have practical experience of implementing CE. The original research has now been supplemented by further research using semi-structured interviews with companies that have applied CESs. Companies that took part in the research were from sectors as diverse as FMCG, technology, manufacturing, outsourcing, travel and financial services. The companies asked to remain anonymous.
So is CE/CES a good metric or just hype, and what is the impact on loyalty?
The consensus of the B2C companies that the CES is a better indicator of customer loyalty than CSat and NPS is reasonable and supported by their own analysis.
The B2B companies recognised that CE is a driver of higher retention. However, their emphasis is more on continuous improvement of the customer experience and less on the CES as an indicator of future behaviours.
Figure 1: Relationship between recommend scores and revenue
What lessons can be learned from companies using CE and CES?
Each of the companies interviewed were asked to share the lessons they had learned.
For the B2C companies, the lessons included:
• Analysis of the CE/CES metrics can be a great internal attention-getter and can target areas where customers are finding things less than easy so that practical improvements can be made.
• Be prepared to evolve how to measure CE/CES and make it more effective. In some instances, a simple yes/no response may be appropriate; in other contexts, a scaled response might yield more useful analytics.
• Ease initiatives need to be effectively communicated internally so everyone can understand their potential impact on the business.
• Suggesting that people should ‘stop trying to delight customers’ might be counter-intuitive, especially since many companies have emphasised the importance of customer service excellence. The challenge should be instead to delight customers where they value it most.
• In the B2B world, customers can interact with many different parts of a supplier company. This means that functions like accounts and logistics need to be as easy to interact with as the sales teams. Effectively, the CES approach requires the B2B companies to design their processes around their customers’ needs rather than for their own internal functional needs.
• Since ‘easy’ needs to be a cross-departmental initiative, the way that it is branded and communicated internally is really important. It needs to start as a change programme but transform into the way the company does business.
• Reinforce ‘easy’ philosophies by marketing successes both internally and externally, and appoint ‘easy’ champions to provide the vision and direction so people see the value in it.
• Top-level support and buy-in is essential and decision-making points require stakeholders with the authority to say yes or no to implementing solutions, especially when they conflict with cost-cutting initiatives.
• Involve customers in the process. Get their input into possible solutions and keep them informed on what you are doing about the things they raise.
• Use customer feedback to demonstrate the impact of the changes.
The findings of this research point strongly towards ‘ease of doing business’ being a good indicator of customer loyalty. The companies that have applied it are finding that ‘ease’ is providing them with loyalty data that goes beyond customer intention (which is where NPS works) and into actual customer behaviour.
The data also show that the negative consequences of high-effort experiences are greater than the positive. However, the positive impact of ‘easy’ experiences has similar prediction accuracy to CSat and NPS. This is possibly because customers often expect ‘easy’ experiences.
The data also point towards the fact that ‘customer delight’ may not add a huge amount to loyalty behaviours. The HBR article suggested that we should ‘stop trying to delight customers’. This research suggests that the better strategy might be ‘delight your customers, but only where they value it’. This may be counter-intuitive to many customer service excellence strategies, but the challenge is to identify where customers expect low- or high-ease experiences and deliver against these expectations.
Another common view across the companies interviewed is that the question ‘How easy is it...?’ is much more effective than ‘How much effort...?’ Not only is this a more positive question, it was also easier for customers to understand. The advantage of the CES approach is that it is not prescriptive but allows companies to identify and correct the issues that are applicable to them. Ease can be used to help identify changes that are required to individual channels, such as the contact centre, the website or interactive voice response (IVR), but can also be used as a company-wide continuous improvement programme.
The conclusion of all the companies interviewed was that CE is worth the effort and produces tangible benefits.
These benefits could be seen by direct measures, such as changes in customer retention figures, or by indirect measures such as reduction in complaints or increase in positive word of mouth. And in a world in which consumer behaviour is increasingly driven by word-of-mouth reviews, creating greater ease looks more and more likely to be the difference between success and failure.
F1 Source: Forbes, Jan21