Customers’ Problems Are Companies’ Loyalty-Building Opportunities

Most customer experience efforts focus on doing bad things less and doing good things more. That’s a reasonable approach. But, realistically, customers will run into problems no matter how hard companies try to eliminate them. Albert Einstein described this well when he said, “Every day, man is making bigger and better fool-proof things, and every day, nature is making bigger and better fools.” Even without foolish customers or incompetent companies, customer problems will persist because customers are constantly changing — their preferences, their technology uses, their life stages.

Companies should embrace this reality because: 1) Problem resolution experiences that exceed customer expectations build loyalty, and 2) problem resolution experiences that fall below customer expectations erode loyalty.

In a recent Forrester survey, we asked North American consumers about their experiences in getting problems resolved. You can find my full analysis in a new report, but here are a few highlights:

  • Repeat business. Eighty-one percent of respondents who said a company’s problem resolution experience far exceeded their expectations also said that they’re very likely to do business with that company again. Only 5% of those who said problem resolution experiences fell far below expectations said that they’re very likely to do business with the same company again.
  • Word of mouth. Sixty-five percent of respondents who said that problem resolution experiences far exceeded their expectations also said that they’re very likely to tell someone about the experience. Even more — 71% — of those who said that their experiences fell far below expectations said that they’re very likely to tell someone.

The link between problem resolution and customer loyalty makes intuitive sense. Customer problems often have serious implications, such as missing flights or incurring late fees. Sometimes they just waste customers’ time and energy. Either way, they create tension and anxiety, and resolution experiences can either extinguish or enflame those feelings.

What’s really fascinating about this data is the degree to which consumers’ responses shift at the extreme ends of problem resolution quality. Consumers who rated problem resolution experiences as 4 out of 5 (with 5 being the best) reported very different intended behaviors than those who rated experiences as 5 out of 5. Consumers in the 5-out-of-5 group were much more likely to say that they would do business with the company again or tell someone about the experience.

A recent Harvard Business Review article titled, “Stop Trying To Delight Your Customers,” found that companies are generally better off meeting customers’ expectations and being easy to work with, rather than aiming for delight. Our data suggests that problem resolution is one moment of truth where it actually pays to go above and beyond — to get into 5-out-of-5 territory. The great news is that most companies currently underwhelm their customers when resolving problems, so above and beyond is still within reach.  

Comments

Great insight. One of the

Great insight.

One of the major issues that many companies face when they try and fix customer issues is actually finding out about them in the first place.

Many major reports show that customers are actually still very reluctant to complain, especially if it involves extra effort on their part. They simply walk away and don't do business with the failing firm again. We would urge companies to do more to build the customer feedback process into their day-to-day dealings and proactively ask for complaints.

If every problem fixed improves customer loyalty, surely it's madness not to?

Agreed, Mark, and thanks for

Agreed, Mark, and thanks for the comment. Your thought makes me think of closed-loop VoC processes, where companies build workflows into their feedback mechanisms to follow up with customers who complain. Have you seen other good tactics for building this into day-to-day interactions? Is it as simple as having call center folks or salespeople ask a question?

Customer support helps more than just the customer

Great post Andrew, and Mark's comments certainly resonate. My company, TeamSnap, is a web-based application to manage teams and groups online. We have designed the site to be intuitive and easy for anyone to use but we have also made customer support a key initiative. We respond to every question and feature request with a personal email and make sure that every inquiry is resolved.

What we have found is that in going the extra mile to assist our customers, they have really helped us to be a better company and produce a better product. We just posted about this on our blog: http://blog.teamsnap.com/customer-service/who-is-helping-whom-how-our-cu... Customer feedback really drives our feature development and, to your point, we have seen many gracious emails from customers after we help to resolve their problem or implement a new feature that they asked for.

Good point -- customer

Good point -- customer service interactions yield a lot of customer insight. I love your practice of following up directly and personally with customers who provide complaints or feedback. How does this work from a resource perspective? Is one person dedicated to the customer complaint/feedback process around service?

Yes, we have one person

Yes, we have one person dedicated to managing the customer experience handling most of the questions and feature requests and passing these on to the team. We take turns on the weekends manning the support lines. It's great to have everyone on the team involved in the effort because you always walk away with something like a better understanding of our customers or how they use the service. It drives how we prioritize adding new features or improve on existing ones with helpful tweaks.

You make outstanding points!

You make outstanding points! When things go wrong, customers will forgive if businesses handle the recovery correctly. It’s all in how well the dropped ball is picked up. As this article (http://www.upyourservice.com/learning-library/customer-service-recovery/...) suggests, managing complaints right can make a huge difference in service quality and loyalty.

Another great post... Mistakes are inevitable, resolution is key

This one is from SmartBlog on Social Media, entitled "Customer Service is the New Marketing."

http://smartblogs.com/socialmedia/2010/12/13/customer-service-is-the-new...

"Moltz assures people not to get too down on themselves when they make customer service mistakes — they’re inevitable because you’re human. The secret is to admit you’ve made a mistake and not try to ignore it away, then tackle it head-on and resolve it well."