Customer effort score: The truth about the controversial loyalty toolby
MyCustomer.com caught up with Professor Moira Clark from Henley Business School and BT's Dr Nicola Millard to discuss customer effort score and asked is it help or hype?
Customer effort score may be the new kid on the block but just like other loyalty measurement tools such as Net Promoter Score (NPS) and Customer Satisfaction score (CSAT), it sharply divides opinion.
First emerging in 2008, the team behind the research, the US Corporate Executive Board (CEB), challenged the notion that companies must ‘delight’ customers and argued instead that what customers really want is to simply be given a satisfactory solution to their service issue.
Additionally, the research claimed that excessive levels of customer service (such as offering free products or services) will only make customers slightly more loyal to the brand and to achieve customer loyalty, rather than exceeding expectations organisations must reduce the effort that customers exert to get their problem solved. Put simply, companies must remove obstacles.
Since gaining notoriety after Harvard Business Review (HBR) first published the research in 2010, BT has become the pin-up of customer effort score in action. Speaking to MyCustomer.com in October last year, Warren Buckley, BT’s MD of customer service, explained that the telecom company adopted its own version of the tool, ‘Neteasy’, which asked customers to rate the company on how easy they were to do business with.
Since implementing the measurement tool across the company’s entire service operations two years ago, BT executives such as Buckley have championed the tool’s merits on the marketing conference circuit, explaining how it helped the company bounce back from a reputational crisis. To address the ongoing debate as to whether customer effort score deserves greater consideration by brands, the telecoms company commissioned Henley Business School to go deeper than those ideas presented in the HBR paper with the new report ‘Customer Effort: Help or hype?’.
Five companies took part in the research: two B2B and three B2C companies. The findings showed that whilst customer effort was really understandable, companies achieved much better results if they phrased the question in terms of how easy it was to do business with the brand, rather than how much effort was needed.
The study identified a number of different types of effort, including cognitive effort (the amount of mental energy required, such as reading terms and conditions); time effort (the amount of time it takes to wait, consume or transact), physical effort (the amount of effort to do something); and emotional effort (how much negative vs positive energy is required, i.e. the extent to which something frustrates the customer).
The research also found that the methodology B2B and B2C companies used to measure effort tended to differ. Whilst the original HBR paper suggests measuring effort on a scale of one to five with attributed phrases – for instance ‘I find this company really easy to do business with’, ‘I find this company easy to do business with’ and so on – some companies measured effort on a scale of 0-10, similar to NPS.
Elsewhere, the report demonstrated differences in emphasis between B2B and B2C companies – with B2C focused on service performance and B2B more on broader, continuous process improvement. Co-author of the report, Moira Clark explains that typically, B2C find it easier because they're regularly doing more research so they're able to add in customer easiness questions more regularly, something that is not so straightforward for B2B.
But the major aim of the report was to determine the correlation between effort and loyalty. “We wanted to know if we focus on customer effort, will brands receive better loyalty and we found that they do,” says Clark. “In the B2C companies, the data analysis proved that customer effort is a strong indicator of loyalty, particularly where there are high effort experiences.
“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.”
Interestingly, some of the findings also directly contradicted the HBR report. Clark says: "The HBR article talked about 'stop delighting your customers' and what we're saying is actually, you need to delight them - you need to delight them where they actually value it. The findings demonstrate that you can get the highest returns by focusing on the areas where customers expect things to be easy but presently find them hard. For example, if you want to take a loan out or you want to open a current account you expect that to be easy and if it turns out to be hard, dissidence creeps in there."
Customer experience smackdown
So how does customer effort measure up to NPS? “Customer effort score provides actionable data that can be used to help predict behaviour and design customer experiences, and in that sense it's much better than NPS,” say Clark. “Customers that find a company difficult are much more likely to defect than if they were simply just dissatisfied, so it's a good predictor of behaviour.
“Customer effort can be measured through the customer journey and there are companies in the research that are doing that now – pinpointing moments throughout the customer journey and measuring them in terms of time/emotional/cognitive effort in order to do something to improve experience and hence improve loyalty.”
BT's customer experience futurologist Dr Nicola Millard explains that the organisation has been using effort score to break down each channels’ effectiveness. She says: “The great thing about that is that it then becomes very actionable, for example if IVR is rated as two you can question whether it's really working for customers. You can ask why and you can do something very pragmatic about it. So it’s a great tool to gauge customer reaction to not only the channels but the changes within those channels.”
However, both Clark and Millard are keen to add that despite the benefits of customer effort score, neither recommends using the measurement as a standalone tool. BT’s Neteasy score is interwoven with other measurement tools, including NPS and customer satisfaction score.
Clark explains that quite a few other companies use customer effort score as part of a wider measurement toolkit. “We aren't saying in our research that customer effort is better than the others, it's part of a portfolio of measures you would use that give you slightly different things. For instance, at different stages of the customer journey you might have a higher satisfaction score but in others have a really low customer effort score. We’re not saying ditch the others and focus purely on effort.”
So for those businesses considering whether to join the early adopters of customer effort score, what lessons can Clark and Millard provide?
Clark believes that ultimately the research should demonstrate the importance of making it easy for your customers to do business with you - and that this is something that should be on your boardroom agenda - because it’s those companies that are doing so that are really showing some great progress. “Companies ought to use it to galvanise staff thinking around this,” she says.
“From the BT perspective, we've been doing this for nearly two years,” adds Millard. “It really is a help and whenever you see anyone from BT retail talking about it at conferences, they show real passion for it because it’s a measure they use to make a difference. It gives them clues to all sorts of elements where customers are having difficulties and gives them solid stuff to work on to improve those things.
“It's not hype; it really does help,” she concludes.
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When I read the original HBR article it reminded me of the example Pfeffer and Sutton use in Hard Facts, Dangerous Half-Truths and Total Nonsense.Essentially 7-Eleven spent a huge sum of money on encouraging a service obsession. After the money was spent Pfeffer and Sutton found that it had done very little to increase sales. Customers valued speed of service not smileyness*.
It seems to me that customer effort scores can help pinpoint exactly how to delight a customer where it matters.
Anyway thanks for putting this post out. The research and case study is excellent.
As usual, Moira and the Henley team have made a useful contribution to the feedback and customer experience debate.
I see our customers using a range of methodologies with mixed results. The key is not which method you use but how well you use it.
If you want a quick overview of the different methods, we have produced a short guide.