Good Customer Service Is Only Half of the Loyalty Equation

In attempting to gain loyalty, most customer service organizations concentrate on improving service experience quality, but new research from Gartner shows that such efforts aren’t enough to boost customer loyalty.

Good customer service “doesn’t provide an upside on loyalty,” says Brent Adamson, distinguished vice president of the Gartner Customer Service & Support Practice.

“At best, a great customer service experience can only mitigate disloyalty, not make customers more loyal. Their loyalty is ultimately tied to the company’s product or service offering, not the customer service experience,” Adamson said. “Our research now shows that there is huge opportunity for customer service to drive tangible business outcomes and boost customer loyalty by helping customers feel more confident in their purchase decisions and better able to maximize the value of their products or services.”

Rather than focusing exclusively on experience quality, customer service and support leaders should also focus on building positive word of mouth and wallet share, according to Gartner. The firm also advises companies to resolve customer issues with low effort and to help customers derive more value from their products or services.

“In other words, the goal for customer service organizations should not be to deliver a world-class service interaction, but to help customers believe that they have made a world-class purchase decision,” adds Jeffrey Schott, vice president and team manager of the Gartner Customer Service & Support Practice.

Customer service interactions are far more likely to lead to disloyalty than loyalty, according to the Gartner research, so efforts to boost customer loyalty should also include actively mitigating disloyalty.

Customers who can resolve their issues with little effort are 61 percent more likely to stay with the company, while high-effort customer service experiences drop that probability to only 37 percent, according to Schott. “Most customers buy based on a product’s quality or value proposition, but they will leave or stop purchasing from a company because of service failures.”

Even with a high-quality experience, about 40 percent of customers will still leave a company if it doesn’t also focus on “value enhancement,” Adamson says.

Conversely, customer service organizations that focus on value enhancement can increase the probability customers will stay with them to 82 percent, according to Gartner. Additionally, value enhancement helps increase the probability customers will increase their wallet share to 85 percent and spread positive word of mouth to 97 percent.

“Most often, companies find value enhancement activities fall under the customer success team,” Adamson says. “Customer service can leverage these same types of activities in the service experience to help drive up customer loyalty.”

Activities that drive value enhancement during customer service interactions include educating customers on how to get more out of their products or services, validating customer purchase decisions, anticipating customer needs, and helping customers achieve particular goals.

Customer service agents could, for example, point out how to use some lesser-known features of the product or more advanced ways to use even common features of the product.

“That will change the way I think about the product or service that I bought from you and give me confidence that I made a good purchase decision,” Adamson says. “The customer feels more empowered.”

The more confidence the customer has in his purchase decisions, the more apt he is to buy additional products from the company and to provide positive word of mouth to others, Adamson contends.