Why measuring customer effort is not enoughby
New research has quantified just how crucial it is to get the balance of effort right in order to maximise revenue opportunities. And the Customer Effort Score alone won't provide a view of that balance.
Customer effort is a concept that has gained increasing attention in recent years, with Customer Effort Score (CES) now a commonly used metric. But new research from Ipsos has quantified just how crucial it is for organisations to get the balance of effort right in order to maximise revenue opportunities.
In the Ipsos paper 'Putting in the Effort' by Jean-Francois Damais & Robin Seed – global chief research officer, and client officer for Ipsos respectively – it is revealed that when customers perceive that they have had to put more effort than a company into sorting out a situation, they are:
- More than four times as likely to stop using them.
- Three times more likely to share their negative experience on social media.
- Around twice as likely to tell friends and family about it.
Customers who feel as though they work harder to get an issue resolved are also less forgiving and favourable.
In order to make sure that these negative consequences won't occur, organisations need to ensure that customers aren't working harder than the company to sort out an issue or get something done.
The below graph highlights this issue – revealing that the more effort customers feel they are putting in compared to companies, the less favourably they view said companies.
With that being said, building on recent research and analysis in multiple sectors in the UK, South Africa, and across Latin America, Ipsos has established that the CES alone is not able to establish this.
Ipsos concludes that organisations need to measure both perceived customer effort, as well as company effort; meaning the amount of legwork customers feel they have put in compared with the company, to resolve an issue – a new CX metric that Ipsos calls the Customer: Company Effort Ratio (C:CER).
The study tests this metric by examining the links between the balance of effort put in by the company and customers, and actual customer behaviour.
The results reveal that C:CER affects customer experience across the customer journey, from pre-purchase through sales to after-sales, resulting in either conversion or lost sales, and retention or churn.
The below graphic highlights some examples of the sorts of positives and negatives attributed to ‘fulfilled customers’ and ‘unfulfilled customers’:
There is also clear evidence of the revenue implications of not getting the balance of effort right.
By integrating sales data, the study was able to quantify the links between the balance of effort and conversion rates – for example, the percentage of customers buying a car.
There is an obvious relationship between the balance of effort and actual conversion rates, as shown above, with higher customer effort being associated with lower conversion rates, and higher company effort being associated with higher conversion rates.
The study inserts these findings into the average sales and conversion rate of an automotive retailer, to highlight just how significant a financial impact C:CER could have.
In the example, the retailer receives, on average, 400,000 enquiries (leads) a year and is currently converting 9% of them into sales, equating to 36,000 sales per year.
The study argues that creating more ‘fulfilled customers’ will increase the conversion rate from 9% to 14%, resulting in a 55% increase in annual sales. With an average gross profit per sale of $1,500, there is a potential increase of $30,000,000 gross profit per annum.
It is clear that Ipsos have uncovered an area of customer service that has previously been missed or overlooked. With the reputational and financial benefits attributed to ensuring that company effort exceeds customer effort, the C:CER metric could provide a valuable new perspective.
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Makes perfect sense, Rhys. Moira Clark of Reading and Henley Business School states that we need to measure effort in 4 areas: physical, emotional, intellectual and time, and that certainly gives a more accurate picture. However, what this work by Ipsos concludes brings in the principle of fairness, which I believe is very powerful in making customers feel more in control. When the burden is on the customer to solve their problem or complete their transaction - and this is a disturbing trend with increasingly more automation and AI being used to replace human beings - then of course they will punish the businesses that force this upon them. And while customers'perceptions do play an important role, the bottom line is that you can't fool them into believing that you are putting in more effort than they are. They are far more savvy than most businesses think.
And I know I keep harping on about this, but when does clever research ever beat sitting down with your customers face-to-face and talking with them?
I've never heard about customer effort before but this was an interesting article, and I'm going to do some more research on it as our company is always looking for ways to grow. Thanks for the great blog post. Josh