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Are Your Customers
Working Too Hard?
Optimise the
Customer:Company Effort Ratio
to maximise Loyalty
February 2016
Jean-François Damais
MEASURING CUSTOMER EFFORT IS NOT ENOUGH
1
Are Your Customers
Working Too Hard?
Jean-François Damais
Customer Effort has received a lot of interest and
attention in customer experience management in the
recent past. The Customer Effort Score (CES) featured
in the 2010 Harvard Business Review article: “Stop
Trying to Delight Your Customers“. In this article the
authors* prove a link between Customer Effort and two
customer experience metrics, namely the likelihood to
keep doing business with a company and the intention
to spread positive word of mouth.
CES is measured by asking a single question: “How
much effort did you have to personally put forth to
handle your request?”
Overall the premise is that the less effort customers have
to put in during an interaction, the more likely they are to
recommend and continue doing business with the
company. This is particularly relevant in complaints
management. It makes intuitive sense that when
customers face negative ‘critical incidents’, or ‘moments
of truth’ in the customer experience, the more effort they
have to put in to resolve the issues and the more
dissatisfied they will be. This is expected to have a
significant impact on customer advocacy and loyalty.
Ipsos Loyalty carried out a survey** across 7 sectors in
the US in order to investigate how companies respond
to customer issues or critical incidents, and the extent to
which they are successful at mitigating 		
resulting negative customer outcomes. As part
of this research we investigated the role Customer
Effort plays on customers’ satisfaction with complaints
handling and on broader outcomes such as advocacy
and loyalty.
2
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
February 2016
Jean-François Damais
One of the key findings is that measuring Customer Effort
in isolation is not enough. While it does link to customer
outcomes, we found that it is the Customer:Company
Effort Ratio that really matters. The ratio, which takes both
perceived customer and company effort into account,
is 3 times more predictive of a customer’s propensity
to use the company again following a negative
critical incident or complaint than the Customer Effort
score alone.
Customers’ perceptions of the effort that companies put
in to resolve their issue have a significant impact on
advocacy and customer loyalty. Without taking into
account customers’ perceptions of how dedicated
companies are to solving their issue, we are missing a
key part of the effort equation. One key implication is
that companies should start tracking the Customer:
Company Effort Ratio as a red flag/indicator of potential
churn and bad mouthing and strive to optimise it. We
detail below the key findings of our research and the business
implications for companies.
• 65%of customers think they had to put a 	
lot effort in to get things resolved
• Just under 50%of customers perceive 									
that companies have made little effort to 									
resolve the issue
Whilst we would expect companies to work hard to solve
a customer issue, our data shows that too often
customers perceive that they are putting more effort in
than companies to get things resolved following a negative
critical incident or complaint.
Don’t let your customers do all the work
“
“
Companies should start tracking
the Customer:Company Effort
ratio as a red flag/indicator of
potential churn and bad mouthing
and strive to optimise it.
• 4 times more likely to start using the 	
company less or stop using it than if they feel 	
companies have put more effort than them
• Over 3 times more likely to share their 	
negative experience on social media
• 2.5 times more likely to tell friends and
family about it
• About twice more likely to 		
complain to the company about it.
3
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
Jean-François Damais
But our data shows that it is the Customer:Company
Effort Ratio that really matters. When customers
perceive that they have had to put more effort than
companies into sorting out a situation, they are:
February 2016
THE CUSTOMER:COMPANY EFFORT RATIO MATTERS
4
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
Jean-François Damais
On average across all sectors, customers perceive that they have had to put in more effort than companies to sort out an issue
they had in about 6 in 10 cases. Among respondents who had a negative critical incident in a call centre of a Cable TV company,
this number reaches 71%. These proportions are alarmingly high when we know the likely outcomes associated
with such perceptions among customers.
All in all, our data shows that the Customer:Company Effort Ratio*** is 3 times more predictive of a customer’s
propensity to use the company again following a negative critical incident than the Customer Effort Score alone.
February 2016
5
•	 When a company has intervened following a
negative incident, the Customer:Company
Effort Ratio is 1.7 times lower than when a
company has done nothing
•	 This lower ratio score leads to a propensity to
use the company in the future which is about
3.8 times higher
Following a negative critical incident or complaint
companies can intervene to reduce customers
pain. Interventions can range from soft actions,
such as an apology or a detailed explanation of the
situation and next steps, to hard actions such as
offering a discount or some form of financial compensation.
Well timed interventions can be expected to reduce the
amount of Customer Effort. In most cases interventions
will increase customers’ perceptions that companies are
taking their issue seriously and putting some effort into
resolving the issue.
Our data shows that interventions following a customer
issue or complaint can indeed be a way for companies
to optimise the Customer:Company Effort Ratio. And the
rewards of doing so are high:
The challenge however, is for companies to know
how to best intervene for maximum return on effort.
Keeping all customers happy at all times is costly and
not a realistic goal. So how should companies prioritise
and manage interventions? There are two key principles
that companies need to follow to try and optimise the
Customer:Company Effort Ratio:
Optimising the Customer : Company Effort ratio
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
Jean-François Damais
1 . Not all critical incidents are
equal. Companies need to discriminate
between different types of incidents and
prioritise incidents that have a high
impact on customers.
2. There is no “one size fits
all” intervention. Different types of
incidents need different types of response.
Customer profile and transaction history
also need to be taken into account.
February 2016
6
KEY BUSINESS IMPLICATIONS
• Companies need to start tracking the Customer:Company Effort Ratio as better indicator of potential
churn and bad mouthing.
• Companies can improve the ratio by letting their customers know that they are taking their issue
seriously and doing their best to resolve it.
• Companies need to understand how to best respond to customer issues to maximise the return on
effort and optimise the Customer:Company Effort Ratio.
*Matthew Dixon, Karen Freeman, Nicholas Toman
**10,061 interviews collected via Ipsos online panels in the USA across 7 sectors in January 2015
*** Customer:Company Effort Ratio definition: Ratio between the Customer Effort Score and the Company Effort Score, both
measured on a 5-pt scale. A low score means that customers perceive that companies are putting in more effort than them
to resolve an issue whilst a high score means that customers feel they are putting in more effort than companies.
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
Jean-François Damais
February 2016
GAME CHANGERS
<< Game Changers >> is the Ipsos signature.
At Ipsos we are passionately curious about people,
markets, brands and society. We make our changing
world easier and faster to navigate and inspire 	
clients to make smarter decisions. We deliver with 	
security, simplicity, speed and substance. We are
Game Changers.
www.ipsos.com
@_Ipsos
Ipsos Loyalty is the global leader in customer 	
experience, satisfaction and loyalty research with
over 1,000 dedicated professionals located in over
40 countries around the world. Our creative solutions
build strong relationships which lead to better results
for our clients. This has made us the trusted advisor
to the world’s leading businesses on all matters 	
relating to measuring, modelling, and managing 		
customer and employee relationships.
Jean-François Damais is Deputy Managing Director of
Ipsos Loyalty’s Global Client Solutions team.
ARE YOUR CUSTOMERS 			
WORKING TOO HARD?
February 2016
This Ipsos Views white
paper is produced by the
Ipsos Knowledge Centre.

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Are your customers working too hard?

  • 1. Are Your Customers Working Too Hard? Optimise the Customer:Company Effort Ratio to maximise Loyalty February 2016 Jean-François Damais
  • 2. MEASURING CUSTOMER EFFORT IS NOT ENOUGH 1 Are Your Customers Working Too Hard? Jean-François Damais Customer Effort has received a lot of interest and attention in customer experience management in the recent past. The Customer Effort Score (CES) featured in the 2010 Harvard Business Review article: “Stop Trying to Delight Your Customers“. In this article the authors* prove a link between Customer Effort and two customer experience metrics, namely the likelihood to keep doing business with a company and the intention to spread positive word of mouth. CES is measured by asking a single question: “How much effort did you have to personally put forth to handle your request?” Overall the premise is that the less effort customers have to put in during an interaction, the more likely they are to recommend and continue doing business with the company. This is particularly relevant in complaints management. It makes intuitive sense that when customers face negative ‘critical incidents’, or ‘moments of truth’ in the customer experience, the more effort they have to put in to resolve the issues and the more dissatisfied they will be. This is expected to have a significant impact on customer advocacy and loyalty. Ipsos Loyalty carried out a survey** across 7 sectors in the US in order to investigate how companies respond to customer issues or critical incidents, and the extent to which they are successful at mitigating resulting negative customer outcomes. As part of this research we investigated the role Customer Effort plays on customers’ satisfaction with complaints handling and on broader outcomes such as advocacy and loyalty.
  • 3. 2 ARE YOUR CUSTOMERS WORKING TOO HARD? February 2016 Jean-François Damais One of the key findings is that measuring Customer Effort in isolation is not enough. While it does link to customer outcomes, we found that it is the Customer:Company Effort Ratio that really matters. The ratio, which takes both perceived customer and company effort into account, is 3 times more predictive of a customer’s propensity to use the company again following a negative critical incident or complaint than the Customer Effort score alone. Customers’ perceptions of the effort that companies put in to resolve their issue have a significant impact on advocacy and customer loyalty. Without taking into account customers’ perceptions of how dedicated companies are to solving their issue, we are missing a key part of the effort equation. One key implication is that companies should start tracking the Customer: Company Effort Ratio as a red flag/indicator of potential churn and bad mouthing and strive to optimise it. We detail below the key findings of our research and the business implications for companies. • 65%of customers think they had to put a lot effort in to get things resolved • Just under 50%of customers perceive that companies have made little effort to resolve the issue Whilst we would expect companies to work hard to solve a customer issue, our data shows that too often customers perceive that they are putting more effort in than companies to get things resolved following a negative critical incident or complaint. Don’t let your customers do all the work “ “ Companies should start tracking the Customer:Company Effort ratio as a red flag/indicator of potential churn and bad mouthing and strive to optimise it.
  • 4. • 4 times more likely to start using the company less or stop using it than if they feel companies have put more effort than them • Over 3 times more likely to share their negative experience on social media • 2.5 times more likely to tell friends and family about it • About twice more likely to complain to the company about it. 3 ARE YOUR CUSTOMERS WORKING TOO HARD? Jean-François Damais But our data shows that it is the Customer:Company Effort Ratio that really matters. When customers perceive that they have had to put more effort than companies into sorting out a situation, they are: February 2016 THE CUSTOMER:COMPANY EFFORT RATIO MATTERS
  • 5. 4 ARE YOUR CUSTOMERS WORKING TOO HARD? Jean-François Damais On average across all sectors, customers perceive that they have had to put in more effort than companies to sort out an issue they had in about 6 in 10 cases. Among respondents who had a negative critical incident in a call centre of a Cable TV company, this number reaches 71%. These proportions are alarmingly high when we know the likely outcomes associated with such perceptions among customers. All in all, our data shows that the Customer:Company Effort Ratio*** is 3 times more predictive of a customer’s propensity to use the company again following a negative critical incident than the Customer Effort Score alone. February 2016
  • 6. 5 • When a company has intervened following a negative incident, the Customer:Company Effort Ratio is 1.7 times lower than when a company has done nothing • This lower ratio score leads to a propensity to use the company in the future which is about 3.8 times higher Following a negative critical incident or complaint companies can intervene to reduce customers pain. Interventions can range from soft actions, such as an apology or a detailed explanation of the situation and next steps, to hard actions such as offering a discount or some form of financial compensation. Well timed interventions can be expected to reduce the amount of Customer Effort. In most cases interventions will increase customers’ perceptions that companies are taking their issue seriously and putting some effort into resolving the issue. Our data shows that interventions following a customer issue or complaint can indeed be a way for companies to optimise the Customer:Company Effort Ratio. And the rewards of doing so are high: The challenge however, is for companies to know how to best intervene for maximum return on effort. Keeping all customers happy at all times is costly and not a realistic goal. So how should companies prioritise and manage interventions? There are two key principles that companies need to follow to try and optimise the Customer:Company Effort Ratio: Optimising the Customer : Company Effort ratio ARE YOUR CUSTOMERS WORKING TOO HARD? Jean-François Damais 1 . Not all critical incidents are equal. Companies need to discriminate between different types of incidents and prioritise incidents that have a high impact on customers. 2. There is no “one size fits all” intervention. Different types of incidents need different types of response. Customer profile and transaction history also need to be taken into account. February 2016
  • 7. 6 KEY BUSINESS IMPLICATIONS • Companies need to start tracking the Customer:Company Effort Ratio as better indicator of potential churn and bad mouthing. • Companies can improve the ratio by letting their customers know that they are taking their issue seriously and doing their best to resolve it. • Companies need to understand how to best respond to customer issues to maximise the return on effort and optimise the Customer:Company Effort Ratio. *Matthew Dixon, Karen Freeman, Nicholas Toman **10,061 interviews collected via Ipsos online panels in the USA across 7 sectors in January 2015 *** Customer:Company Effort Ratio definition: Ratio between the Customer Effort Score and the Company Effort Score, both measured on a 5-pt scale. A low score means that customers perceive that companies are putting in more effort than them to resolve an issue whilst a high score means that customers feel they are putting in more effort than companies. ARE YOUR CUSTOMERS WORKING TOO HARD? Jean-François Damais February 2016
  • 8. GAME CHANGERS << Game Changers >> is the Ipsos signature. At Ipsos we are passionately curious about people, markets, brands and society. We make our changing world easier and faster to navigate and inspire clients to make smarter decisions. We deliver with security, simplicity, speed and substance. We are Game Changers. www.ipsos.com @_Ipsos Ipsos Loyalty is the global leader in customer experience, satisfaction and loyalty research with over 1,000 dedicated professionals located in over 40 countries around the world. Our creative solutions build strong relationships which lead to better results for our clients. This has made us the trusted advisor to the world’s leading businesses on all matters relating to measuring, modelling, and managing customer and employee relationships. Jean-François Damais is Deputy Managing Director of Ipsos Loyalty’s Global Client Solutions team. ARE YOUR CUSTOMERS WORKING TOO HARD? February 2016 This Ipsos Views white paper is produced by the Ipsos Knowledge Centre.