New Research Shows How Customer Service Can Now Drive Both Customer Loyalty and Retention
In today’s uncertain and volatile environment, customer service must play a larger role in driving both customer retention and also growing customer loyalty, according to Gartner, Inc. However, most customer service organizations attempt to do so by leaning heavily on initiatives to improve service experience quality. Gartner research reveals this long-held belief is wrong, as a good service experience is not enough to make customers more loyal.
“At best, a great customer service experience can only mitigate disloyalty – not make customers more loyal. Their loyalty is ultimately tied to the company’s product or service offering, not the customer service experience,” said Brent Adamson, distinguished vice president for the Gartner Customer Service & Support practice. “Our research now shows that there is huge opportunity for customer service to drive tangible business outcomes and boost customer loyalty by helping customers feel more confident in their purchase decision and better able to maximize the value of their product or service.”
“In other words, the goal for customer service organizations should not be to deliver a world-class service interaction, but to help customers believe that they have made a world-class purchase decision,” added Jeffrey Schott, vice president and team manager for the Gartner Customer Service & Support practice.
To do this, customer service and support leaders must focus on two key actions to increase customer retention, positive word of mouth and wallet share: resolve customer issues in a low-effort manner and help customers derive greater value from the product or offering.
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Customer service interactions are far more likely to lead to disloyalty than loyalty, according to Gartner. This means the battleground for customer loyalty must also include actively mitigating disloyalty.
Gartner research shows customers who experience a low-effort service experience in resolving their issue are 61% more likely to stay with the company. On the other hand, a high-effort customer service experiences drops that probability to only 37%. “Most customers buy based on a product’s quality or value proposition, but they will leave or stop purchasing from a company because of service failures,” said Mr. Schott.
While low-effort resolution helps to ensure customers remain loyal, about 40% of customers will still leave a company even if they get that high-quality service experience. To avoid leaving that 40% on the table, customer service needs to focus on “value enhancement” – or impacting customers’ perceptions of the product or offering. Customer service organizations that focus on “value enhancement” can increase the probability a customer will stay with the company to 82%. Even more, “value enhancement” helps to increase the probability customers will deepen their wallet share to 85% and spread positive word of mouth to 97%.
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“Most often, companies find ‘value enhancement’ activities fall under the customer success team,” added Mr. Adamson. “Customer service can leverage these same types of activities in the service experience to help drive up customer loyalty.”
Activities that drive “value enhancement” during customer service interactions include educating customers on better or new uses of the product or offering, validating customer purchase decisions, anticipating customer needs and helping customers achieve a goal.
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