Don't let complexity kill your sales model

For decades, scale economies ran like clockwork in the world of sales. Companies in business-to-business (B2B) markets consistently grew their revenues faster than their sales and marketing expenses. But over the past decade or so, that trend has stalled and in some cases reversed. The sales models for many large companies have become more complex and less efficient, putting pressure on profit margins. 

How big is the problem? Bain & Company analyzed the 2003-2011 income statements of roughly 200 large US-based companies in healthcare, technology and financial services. Just over half of those companies had increasing sales and marketing expenses as a percentage of revenues over that period or failed to demonstrate the benefits of scale that one would expect from their growing size. 

A few factors account for this reversal. Business customers increasingly want their vendors to have real expertise in their specific industry or function, such as finance or marketing. They expect vendors to help solve business problems, not just sell widgets. In turn, B2B vendors have expanded their product lines, and many have added solutions that knit together disparate products or services into an integrated offering. 

Achieving growth targets profitably requires a scalable, high-return model. That means knowing where and how to invest in sales resources. As B2B providers restructure their sales model for these new realities, four actions can help them keep on track with greater certainty and pace. 

1. Identify customer sweet spots and define the appropriate offering, then put arepeatable process in place to expand to other segments. Suppliers can identify the sweet spots for investment by using two criteria: segments with the most attractive lifetime economics and those where a company’s distinctive offerings win consistently.

Infor, a US-based firm that sells software solutions mostly to small businesses, identified roughly 2,000 micro-verticals, such as brewers and hospitals, where it had more specific and relevant offerings than competitors. By identifying standard building blocks of functionality that can be readily adapted for different geographies or micro-verticals, Infor has created a repeatable process.

2. Get the right people in front of the customer at the right time. It’s critical to get right the mix and sequence of industry or functional sales specialists. Too few could jeopardize a sale because an expert may not be available to cover an area the customer considers crucial. Too many may make the cost of the sales effort uneconomic relative to the revenues accrued.

Investment in specialists thus can be “perishable” as a solution moves through its life cycle. Deploy specialists early in the cycle to gain a foothold, and expand to build expertise ahead of the competition. Once sales increase, make sure the customer relationship executive learns the basics from the specialists, in order to independently generate and qualify leads. When sales have ramped up sufficiently, reserve use of specialists only for the biggest, most complex deals, and redeploy them to other potential high-growth areas.

AutoTrader, a US media and software solutions provider to automotive dealers, decided to untangle its myriad go-to-market organizations after making four acquisitions in two years. To boost productivity, AutoTrader realigned specialist roles for some mature products and began to move administrative functions from the generalist account managers to the inside service team so they could generate leads across a broader portfolio. At the same time, the company added specialist roles for complementary products in the software portfolio, such as a customer relationship management product. Early results are promising: The cross-selling pipeline is growing, and account planning across generalists and specialists is working well.

3. Design compensation to promote behaviors that support your business goals. It’s critical that everyone in the sales organization focuses on attaining defined, well-communicated business goals and growth targets. Incentives should motivate individuals to reach those goals rather than falling back on traditional measures such as “last year plus 10%.”

One food company, for instance, struggled to raise prices in part because salespeople were measured strictly by their sales volume, with a bonus for their tenure. By changing the performance metric to give equal weight to volume and maximizing price, the company moved prices from slightly below market to nearly 2% above in just two years. That move alone yielded a $50 million increase in pre-tax earnings.

4. Equip the back office to allow sales representatives to spend more time selling.The back office can take on most of the lead qualification, proposal development, pricing approval, contract management and billing management—adding back 20% to 30% productivity to a sales representative’s day. Making sure billing errors get fixed, for instance, consumes a lot of time for some reps who want to protect their customers’ loyalty. With a concerted effort, a company can apply serious process improvement to the billing unit, hire select skilled analysts and look to attain a zero-defect operation.

Some complexity in B2B markets is inevitable, but not to the extent that it stalls growth. Cutting through complexity requires a simpler, disciplined sales model that can work in one segment after another.

Read the full report: Is complexity killing your sales model?

References  

Dianne Ledingham, Mark Kovac, Michael Heric and François Montaville: Is complexity killing your sales model? Retrieved January 15, 2014 from http://www.bain.com/publications/articles/dont-let-complexity-kill-your-sales-model-forbes.aspx

Image: http://www.wired.com/images_blogs/photos/uncategorized/2008/04/15/complexity.jpg

Dragan Simeunović
Senior Sales Consultant

.

The Trend That is Changing Sales

                                                       Figure 1: Have your sales people achieved annual quota last year? 

Over the past several decades the structure of sales organizations have remained largely the same. They have been primarily based on outside field salespeople who make face-to-face sales calls with prospective customers and current clients. In turn, the field salespeople would be supported by inside sales representatives who helped them complete their daily tasks. 

Today, the traditional sales organization structure is undergoing a significant change. Many sales organizations are transitioning from a field sales model to an inside sales model, where the inside salespeople work independently from the field and are directly responsible for closing business. In order to understand the magnitude of this trend, in-depth interviews and extensive surveys were conducted with over one-hundred vice presidents of sales at leading high technology companies and business services providers. The resulting research provided detailed insights about the evolution of sales organizations along with the following key finding:

Over the past two years, forty-six percent of study participants reported a shift from a field sales model to an inside sales model. Twenty-one percent reported a shift from inside sales to a field sales model. More than twice as many study participants reported moving to an inside sales model.

There are three key factors that determine when a sales organization will utilize a field or inside sales model. They are the sales organization’s stage of development, the complexity of the products that are sold, and to a lesser extent, the sales leader’s perception of inside and outside sales model effectiveness. 

Sales Organization Development Stage 

Every sales organization can be classified into a "Build," "Compete," "Maintain," “Extend,” or "Cull" stage based upon its development. The Build stage is when the sales organization is first establishing itself.  If successful, it will proceed to a high-growth Compete stage and then to Maintain stage that is contingent upon predictable success. As the sales organization ages, it will enter either the Extend stage and enjoy longevity or the Cull stage, where it declines and is forced to reduce its size. The ratio of outside or inside salespeople changes as the organization moves from the Build to Compete to Maintain development stages. 

The challenges sales organizations face is dependent upon the stage of their development. The top sales challenge in the Build stage is creating sufficient sales coverage to push the product into the market. The Compete stage challenge revolves around quickly scaling the sales organization so it can compete effectively against larger established competitors. The focus shifts to maximizing sales productivity by lowering the cost of sale and increasing the average sales price in the Maintain stage. The Extend stage challenge is to attain widespread customer adoption so their solution becomes the de facto standard. The Cull stage challenge is to revitalize a demoralized and marginalized sales force. These challenges directly influence the sales organization’s structure and whether a field or inside sales model will be deployed. 

Sales Cycle Complexity 

The complexity of the sales cycle determines the evolution of the sales organization and at what point outside field or inside-based sales models will be implemented. Sales cycle types can be classified by complexity as Enterprise, Platform Cloud-based or Point-specific. Each of these sales cycles vary in complexity depending upon the number of individuals and departments involved in the selection process, the size of purchase, and sophisticated nature of the solution offered. 

Enterprise sales typically are large capital expenditure purchases that involve long sales cycles. Multiple departments of a company and all levels of the organization (C-level executive, mid-level management, and lower-level personnel) are needed to approve the solution’s functionality and its purchase. A point-specific sales cycle is usually targeted to solve the business problems of single department within an organization and the purchase decision is made by a small number of decision-makers usually at the lower-level of the organization. The Platform Cloud-based sale provides a turnkey business solution for the customer over the internet and is sold directly to the business users of an organization. There is a preferential field and inside sales model strategy for each of the sales cycle types.  For example, a field sales model is preferred for enterprise sales cycles and an inside sales model is preferred for Platform Cloud-based sales cycles. 

Sales Leaders Perception of Field and Inside Sales Models 

While the goal of this study was to gather quantifiable metrics based on surveys and interviews with sales leaders, there is another aspect of sales model decision making that cannot be ignored. Ninety-eight percent of study participants responded that the characteristics between inside and outside salespeople are significantly or somewhat different.

Most sales leaders believe that outside salespeople have superior sales skills and the most accomplished sales professionals are in the field as evidenced by the sales leader comments below. This in turn can influence their decision and whether they implement a field or inside sales model. 

“Field Sales is more strategic, meeting with C-level executives and developing strategic business innovation to help them grow their business versus inside which is more quantity and not as in depth majority of the time.”

“Inside Sales is a transactional engagement and the focus is on opening opportunities.  Outside teams are solution and relationship based.”

“Outside sales requires far more emotional intelligence, situational awareness and planning. Our inside sales, while equally demanding, requires persistence, research, and back end work.”

Furthermore, many sales leaders have a personal bias toward deploying outside salespeople over inside sales. In some cases, this inclination was based on their own experience from many years ago when they were in field sales. However, this historical disposition is being offset by the changing nature of how customers buy today. Customers are smarter and information is not only easier to find, but available in greater detail than ever before. In addition, technology has become a way of life and completely disrupted the buying process. Via the Internet, customers can research products, prices, and opinions. 

This situation is driving more sales leaders to consider and then deploy an inside sales model. For example, study participants were asked to rank the influential factors that are responsible for the migration from field to inside sales. Sixty percent responded that it was due to the increasing pressure on business performance and profitability. Fifty-four percent said it was due to technology advancements. Forty-seven percent felt that buyers more readily accept the remote selling process and thirty-four percent believed it is because of societal changes such as a mobile workforce and personal online purchasing habits.  

Study participants also cited the following advantages of an inside sales model compared to field sales model. Eighty-four percent believe it is easier to onboard new salespeople and share best practices. Seventy-nine percent responded that inside sales allows the organization to scale faster. Increased call activity and selling volume was cited by seventy-eight percent of responders. Seventy-six percent acknowledge that inside sales provides a better strategy to penetrate small businesses and mid-markets. 

Today, there is a changing perception among sales leaders about the strategic role inside sales performs. This change is due to the benefits that sales leaders believe the inside model provides in terms of scaling activity, growing the organization, and attacking specific markets.

Please click here if you would like to receive the full 29 page report on the latest sales organization strategies and key sales performance metrics.

  

References   

Stewe W. Martin: The Trend That is Changing Sales - Harvard Business Review. Retrieved January 6, 2014 from http://heavyhittersales.typepad.com/heavy_hitter_sales_sales_/2013/11/the-trend-that-is-changing-sales-harvard-business-review.html

Blaž Mertelj
Managing Director & Senior Consultant

  

How Hard Is It To Get Cold Email Replies?

                                                                               Figure 1: Is Email dead or dying?

I tend to get overly excited when I ever I get a positive response from a prospect to a cold email.

I feel as if I cracked some code to gain that momentary share of attention bandwidth and now I’m “in”. From the likely dozens to hundreds of emails that individual received, they chose to take the time to respond to mine. 

I realize sometimes its PSL (pure sh*t luck) or simple name recognition but I’d like to attribute some of my success to being thoughtful and deliberate in the approach. Keeping the email simple, relevant and familiar seems to be the key to getting that initial engagement.

In thinking about the metrics behind “cracking the cold email code”; I started wondering what are the odds of my email being seen, let alone opened, let alone responded to no matter how creative and thoughtful I was.

I decided I’d start with the general question of “how many b2b emails are sent on a daily basis”. Most of the data that I was able to personally find that felt “real” (e.g. backed by research) was dated…it seems like 2011 was the last year I could find consistent or comparable figures from multiple sources on email trends. I could find anecdotal stuff from one vendor or data from a survey etc; but trying to validate those figures from multiple sources proved challenging. Either I’m looking in the wrong places (likely), or these research firms simply chase the shiniest trend or the press just isn’t covering this as much so the content isn’t as well indexed. The good research on email was generally pre-mobile and pre-social; so maybe these firms just shifted their attention and focus.

Does that mean email is dead or dying? 

Not a chance; but like all things digital it’s obviously evolving. Even with the explosion of social sites, webapps and mobile – all these things require an email address for the most part as a form of digital currency proof of identity / user name. 

I did find one source of email trend data that at least had a history of providing information consistently. The Radicati Group out of Palo Alto, California describes themselves as the “Leading analyst firm covering Email, Social Media, Instant Messaging, Security, Wireless, Archiving, eDiscovery, DLP, Unified Communications and more” I’ve never heard of them previously (which means absolutely nothing in terms of their credibility) but there is a nice library of market research information available on their website; most of which is pay to access. I did read the executive briefing they made publicly available on the Email Market for 2013-2017 (link below) and wanted to pass along some interesting figures they share: 

• Counting both business and consumer users (unique individuals?); there are over 2.4 billion email users worldwide. There are about 7 billion people in the world; so that number feels “right”. They forecast that number will grow just 3% a year through 2017. I’m guessing internet accessibility in 3rd world countries supresses that growth.
• Counting both business and consumer accounts (unique addresses?), there are 3.9 billion accounts; growing to 4.9 billion by 2017 (growth rate 2x number of users); why the difference? Most people use more than one email address…reasonable. 
• Worldwide email traffic (business and consumer) is estimated at 182 BILLION EMAILS PER DAY; expected to grow to 207 BILLION EMAILS PER DAY in 2017. This is only a 3% increase YOY…but that is a serious huge number… Doing the math; that says the average user gets about 75 emails per day (182 billion emails divided by 2.4 billion users) – that math checks out. Separating the business and consumer is where it gets interesting. 
• Business alone counts for over 100 Billion of that 182; and they expect business emails to go up 7% per year while consumer emails to decline by 3% per year. I buy those numbers, we’re emailing friends and family less frequently due to social and texting – but the business world is still heavily reliant on “traditional” email for both internal and external dialog. I would even buy a much steeper decline on consumer / personal than they illustrate and sharper increase on business.

So…let’s go back to my original question that prompted this and figure these odds out; let’s say 65% of email users have a business email account. I’m taking some liberties there and probably too generous, but unemployment rate plus service / retail jobs that don’t have business email addresses…that means 1.55 billion business email users (65% of 2.4B) and with 100 billion business emails per day; that equates to about 64 business emails per day per professional (lower than I would have guessed).

Now we have to start thinking internal business emails vs. external business emails and associated open rates of each etc.. This made my head hurt…but playing with numbers from my gut; I said 40% of these emails were external (e.g. knuckleheads like me) and we probably are in the industry average 25% open rate and 5% click thru rate (I’m equating a click-thru with a reply).

So this leads to roughly 26 external business emails per day; about 6-7 of those are opened per day, and 1.3 click-thru’s or replies…so with my 1 reply received; I guess I was the lucky winner that day and cracked the code to get the attention this individual had for that 1 of 1.3 external email correspondences he /she had that day with external emails. 

Email Market 2013-2017 Executive Summary: http://www.radicati.com/wp/wp-content/uploads/2013/11/Email-Market-2013-2017-Executive-Summary.pdf

References

B2B Lead Nurture Engine: How Hard Is It To Get Cold Email Replies? Chasing the odds and cracking the code. Retrieved December 24, 2013 from http://nurtureengine.wordpress.com/2013/12/20/how-hard-is-it-to-get-cold-email-replies-chasing-the-odds-and-cracking-the-code/

Image: http://blog.salesloft.com/wp-content/uploads/2012/06/cold-emailing1.png

Blanka Cigler

Senior Consultant, Coach & Project Manager

Traditional Sales Skills Can Be Part of The Problem, Not The Solution

  
                                               Figure 1: By focusing on buying, not selling, your salespeople will win more business

If you are still focused on selling skills, then you are missing the bigger picture.  That is because the role of traditional selling skills in sales success has been sidelined.  A great number of them are outdated and outmoded.  Indeed if you listen to your prospects, they may be the problem, rather than the solution.

Here is a straightforward reality:  Buying has changed.   Selling on the other hand has not.  Indeed, to say that buying has changed is an understatement – this is the era of changed priorities, slashed budgets and stalled projects.  Yet, the sales techniques, or sales training has changed little to reflect these new realities.  Inevitably this has resulted in a widening gap between how buyers buy and how sellers sell.

More traditional selling is not the answer, simply because it is not enough to get buyers to buy.  More of the same in terms of cold calling, sales pitches and proposals is not the solution.  They are not what today’s more sophisticated buyers want.  That means they cannot deliver higher conversion rates, or increased sales success.

But if sales skills are not the number one issue for sales teams at this time, what is?  Well, it is to re-connect how we sell with how our customers now buy.

Selling skills are by definition useless unless they help the buyer to buy.  Sales training courses are providing sellers with the skills and techniques that don’t matter, while overlooking those that do.  That is those that are focused on facilitating the purchase order and that effectively help the buyer to buy.

The challenge for salespeople is to help the buyer to meet the requirements of his, or her internal buying process, to build a compelling business case and to get the support required to ensure that the purchase gets sanctioned.  These are the most effective of selling techniques any sales person could possibly use.  However, despite their potency they are rarely in use.  You won’t find them in sales books, or in sales training seminars.  That is because they focus on buying not selling!

Let your competitors focus on more of the same – cold calling scripts, presentation skills and closing techniques.  Leave them in the dust as you focus on the opposite.  Your sales people need skills in that focus on buying, not selling.  That is skills in 3 vital areas:

1. Helping the buyer to build a compelling business case around your solution (i.e. the costs, benefits and risks equation).
2. Ensuring that the purchase order gets signed by helping the buyer to navigate the steps of the buying process.
3. Getting buy-in for your solution higher and wider in the buying organization, by covering all those involved in making and shaping the decision, from the senior executives that must sign it off to the end users that must be consulted along the way.

By focusing on buying, not selling, your salespeople will win more business.  The first step however is awareness – a new awareness of how buying decisions are made (the steps, the people involved, the information required, and so on.  Indeed, this is a particular urgency.

Most salespeople gloriously underestimate the sophistication of today’s buyers.  That makes redrawing the map of how their customers buy an essential first step.  From there sellers are in the perfect position to re-engineer how they sell.  That is to adapt how they sell – from cold calling to closing – to how their customers now buy. It is to put the business case, before the sales proposal, the sales process, before the sales process and to sell higher, wider and deeper. 

References 

Ray Collins: Buyer Seller Insights. Traditional Sales Skills Can Be Part of The Problem, Not The Solution. Retrieved December 12, 2013 from http://buyer.sellerinsights.com/2010/11/15/traditional-sales-skills-can-be-part-of-the-problem-not-the-solution/portrait-of-a-mature-business-man-clearing-doubt-of-an-executive-at-a-seminar/

Tamara Ćetković
Consultant, Coach & Project Manager

How To Influence The Buyer’s Choices

Figure 1: Seller can use choice-making process to sway the buyer’s decision

The New Science Of Helping The Buyer To Choose

Choice within the context of any sales pitch or proposal is a good thing.  Indeed, offering the buyer a choice rather than a single product-price proposition can boost success for many reasons. 

Presenting the buyer with choices can help the him, or her to decide. That is the scientific reality based on cognitive research by experts such as Dan Ariely. It points out, for example, that most people don’t know what they want until they see it in context.

Could offering your customers more choice increase your likelihood of success?

The bottom line is that choices offered by the salesperson and how they are presented has an important bearing on the buyer’s decision.

The Theory Of Relativity In Buying

When it comes to making choices it is all relative. Our preference is not an absolute one – rather it is dictated by the range of options available, as well as how those options are presented.  Think of it as the ‘Theory Of Relativity’ in buying.

What is the context you are setting for your solution?

That is important for sellers because, it means that presenting the customer with the best option is not necessarily enough. It is equally important to put the selection in context.

6 Ways To Sway The Buyer’s Choice

The way that options are presented to the customer can be effective in nudging him, or her to select one option, over the other. Here are 6 strategies that the seller can employ to sway the buyer’s choice.

1. Frame The Decision

The seller can frame the decision by setting it in the context of other extremes.

For example:

- Option A produces 200 units per hour

- Option B produces 125 units per hour

- Option C produces 50 units per hour

We recommend Option B for you because it meets your requirements in terms of units per hour (with plenty of room for growth) and provides the best output-cost ratio of all 3 – a cost per unit of 25c compared to 70c for Option A’.

Do your quotations and proposals frame the choice in this way?

---

2. Offer 3 Choices

Research suggests that 3 options is better than two with their being an inherent tendency to go for the one in the middle  (as in the example shown below).

Too many choices can make a decision more difficult (as per the example shown at this link).  So, if the range of options offered is complex or confusing it probably won’t work.

Related to this the tendency is to focus on things that are easily comparable.  So, making the comparison straightforward is important.

Do you carefully manage (and limit) the choices that are offered?

---

3. Set A High Anchor Point For Price

The research suggests that the seller should start with the expensive option first.

The higher price can then serve as an anchor point against which the customer will gauge subsequent prices. For example:

- Our Platinum Package is $500 per month per user, which includes unlimited access, full customization, premium support and own-branding.

- We have a Silver Package which includes 20 hours of access per month, email support and a strong (but yet slightly less extensive feature set) for $120 per month.

The $120 per month fee is likely to be more favorably evaluated in the context of the initial price of $500 per month.

Do you anchor the buyer’s price expectation in this way?

---

4. Add Bells & Whistles

We can be swayed in our choice between alternatives by the addition of ‘bells and whistles’, so to speak.

Dan Ariely gives a nice example of this in an experiment regarding the choice of holiday vacations.

Consumers were offered the choice of a similarly priced and easily comparable vacation in Paris or Rome. It was only when one of the packages was amended to include ‘FREE breakfast’ that a clear winner emerged.

Offering a freebie or an extra (even it is not in reality worth much) can distract us from our rational analysis of costs and benefits.

What is the ‘FREE breakfast’ that could swing customers to option that you want them to chose?

---

5. Offer A Decoy Option

Some marketers offer the customer ‘a decoy option’.

That is a third option that serves no purpose other than to make it easier for you to choose among the other options.

The example is often given of the newspaper subscription which offered:

- Option 1: Digital Subscription – 59 per annum

- Option 2: Print Subscription – 129 per annum

- Option 3: Digital & Print Subscription – 129 per annum

Option 2 – the Print only subscription could be seen as a decoy.  It’s purpose was to create a preference for Option 3.

Do your quotes and proposals contain a decoy that nudges the customer in a particular direction?

---

6. Provide Social Comparison

There is a strong element of social comparison in terms of how we evaluate different options.

In short we are influenced by what is the most popular options chosen by others. That is the power behind the feature used by Amazon and others that says customers who bought this book also purchased these books.

Telling the customer what customers, or groups of customers chose particular options and why, can help them to make their own selection.

Do you provide your customers with a social comparison to guide their choices?

---

References 

Collis Ray: Buyer Seller Insight: Sellers: Buyer OCD: The Obsession With Lowest Price. Retrieved November 29, 2013 from http://buyer.sellerinsights.com/2013/06/25/how-to-influence-the-buyers-choices/

Blaž Mertelj
Managing Director & Senior Consultant

Why focusing on delighting your customers is a stupid strategy?

                                         Figure 1:  Are you "exceeding customer expectations" and /or "creating customer delight"?

If you read the profiles of many of the heads of customer service on LinkedIn (or the service areas of their company’s websites), you might be forgiven for concluding that they were almost all focused on the lofty goals of “exceeding customer expectations” and/or “creating customer delight”. Maybe your organisation claims to do the same.

But ground-breaking recent research by the CEB (the organisation that brought you “The Challenger Sale”) makes a strong case for all this talk of delighting customers being a misguided and - for almost every company on the planet bar a few shining stars - ultimately unprofitable strategy. 

As anyone who has had cause to phone O2’s customer service line (note: other mobile phone companies offer an equally awful experience) will recognise, I think most of us would be prepared to sacrifice the occasional opportunity to have a truly “wow” experience in return for not ever having to suffer any more of the much more common “doh!’ experiences. 

An Effortless Experience? 

The CEB’s research (spanning nearly 100,000 customers) found that there is almost no discernable increase in loyalty amongst customers whose expectations were exceeded compared to those whose expectations had simply been met - but that there was a precipitous decline in loyalty amongst those who had been disappointed by their service experience. 

The full details was revealed in “The Effortless Experience” by Matthew Dixon, Nick Toman and Rick Delisi - published in September of this year. I thought it is worth whetting your appetite by sharing a few of their conclusions. 

Customers just want it to be easy 

It turns out that the overwhelming majority of customers aren’t looking to have their expectations exceeded. They simply want their service experience to be easy. Here are three findings that particularly stood out for me: 

1: A Strategy of Delight Doesn’t Pay 

Far from loyalty increasing when expectations are exceeded, the study found that loyalty pretty much flat-lines once expectations have been met. But it also found that most organisations grossly underestimate the negative loyalty generated by service experiences that fell below the customer’s expectations.

As the authors point out, for most companies (if you work for Nordstrom or Zappos, ignore this) trying to achieve delight is unprofitably expensive - but a failure to get the service basics right is punishingly unprofitable. You will lose customers, and they will share their bad experience with many others to create a vortex of negative word of mouth. 

2: Customer Service Interactions Tend to Drive Disloyalty, not Loyalty 

The study found that most customer service interactions did more harm than good - and there’s a good reason why: customers tend to call customer service when they have a problem, and because the majority of customer service interactions fail to fully, quickly and effortlessly solve the problem, they tend to make things worse - in many cases, much worse. 

They found that positive service experiences generated relatively little positive word of mouth when compared to positive product experiences - but that negative service experiences generated FAR more negative word of mouth than negative product experiences. 

There’s some simple and obvious psychology behind this: positive product experiences are a reflection of our own wisdom - and so we want to share them. But negative service experiences make us feel disrespected and angry, and we want to help our friends and colleagues avoid going through the same. 

3: The Key to Mitigating Disloyalty is Reducing Customer Effort  

Finally, the study found that disloyalty is directly related to the degree of effort the customer has to go through in order to get the problem completely resolved. This isn’t just about being able to claim “First Call Resolution” (FCR): it’s about making sure that the customer doesn’t suffer related downstream problems. 

In fact, obsessing about FCR statistics turns out to be dysfunctional, since it encourages the CSR to mark the call closed when there may still be some as-yet-undiagnosed issues that are going to manifest themselves later on. The CEB talk about “next issue avoidance”, and it's a factor that really sets good service organisations apart from the rest. 

Having to make more than one call, having to repeat information as you get passed around the organisation in a vain attempt to get to someone who can do something, and being told that an apparently sensible option “isn’t corporate policy” - these all contribute to making the customer feel frustrated, uncomfortable, unloved and ultimately disloyal.  

If you don’t yet believe the importance of this, consider the following statistic: 96% of customers who had a high-effort service experience reported being disloyal, compared to only 9% of customers who reported a low-effort experience. The message is clear - your primary goal must be to make the service experience as simple, straightforward and easy as possible for your customers and if you don’t, they will leave.

So tell me: how does this shape up against YOUR experiences as a customer? And how good a job is your customer service team doing in making it easy for your customers to have their problems resolved. Oh, and if you’ve got any “doh!’ experiences (or even any “wow!”) experiences you’d like to share, please add a comment. 

References 

Bob Apollo: Inflexion-Points: Building Scalable Businesses. Why focusing on delighting your customers is a stupid strategy. Retrieved November 28, 2013 from http://www.inflexion-point.com/Blog/bid/100074/Why-focusing-on-delighting-your-customers-is-a-stupid-strategy

Image: http://blog.15five.com/wp-content/uploads/2013/04/iStock_000018370766_Small.jpg 

Tamara Ćetković
Consultant, Coach & Project Manager