• May 11, 2010
  • By Lior Arussy, founder and president, Strativity Group

The Trouble with Tribal

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In the early days of the Web, companies recognized that driving customers to online self-service would reduce costs significantly. As a result, the earliest generation 

of self-service efforts—and, sadly, the self-service still common today—focused on simplifying the customer’s Web experience. Still, first-generation self-service sites achieved several milestones in that pursuit: 

1. Data-source consolidation. Prior to the focus on self-service, corporations designed their Web presence with a “brochure” mindset—and in fact, industry jargon for such sites was “brochureware.” Organizations posted their products and services on their Web sites for customers to see and review. Companies started making critical information publicly available with the aim of simplifying transactions. Brokerage customers could buy and sell their own securities. Retail customers could directly place orders, view inventory status, and track shipments. Access to information drove the consolidation of internal data sources to reduce the time to and time of transaction. 

2. Usability and user interface. The shift from basic Web presence to self-service functionality required better design of forms for data capture and transactions. Concern about usability and transaction efficiency resulted in reducing the time that customers were required to spend on the site. 

3. Availability of insightful information. The epitome of such information-sharing was and remains the airline industry. Airlines revealed seating plans so customers could choose their own seats. In general, customers enjoyed greater diversity of information, which allowed them to personalize their selections and ultimately shift their transactions away from the contact center to kiosks or other self-service channels. 

4. Around-the-clock service. The ability to access information and conduct transactions 24/7 was a boon not only to busy travelers accustomed to conducting business at odd hours, but also to customers unwilling to wait in line for an agent. The convenience attracted customers to self-service. Banking customers could transfer money, airline passengers could book flights, and retail shoppers could snap up bargains—at any time. Contact centers were able to reduce or eliminate late-night and weekend agents—and the higher wages they commanded—further driving down call center costs. 

5. Basic recognition. Web sites allowed customers to build a profile of preferences—and the customers’ preferences were recognized each time they returned, reducing both the complexity and the time necessary to complete a transaction. 

All well and good, but the downside is severe. Designing self-service for the utilitarian customer accelerated the commoditization of products and services. Customers were left to determine their own differences and to find any element of uniqueness in the vast printed catalogs presented to them by vendors. 

Self-service sites treated the utilitarian customer as someone who sought to conduct transactions as quickly as possible and then move on to other activities. (Applying this line of thinking to retail stores has led some bricks-and-mortar retailers to replace people with automated kiosks that could place customer orders.)

Yet when Strativity Group’s 2009 Customer Experience Consumer Study asked 1,994 consumers to identify the drivers of exceptional customer experiences, they pointed to human interactions with their favorite vendors. Such self-service channels as the Web and interactive voice response didn’t show strong correlation to loyalty and future purchases. The consumer verdict was very clear: Exceptional customer experiences are rewarded with premium prices, longer relationships, and larger purchases. These results have been validated in multiple customer experience diagnostics we’ve conducted with clients in the last several years. Although self-service channels are required to be easy to use and intuitive, consumers do not attribute loyalty to interactions through these channels.

I would go a step further to state that by shifting customers to self-service channels, companies are trading cost-savings for loyalty. Following the cost-reduction path comes at a hefty price most companies are not aware of. Consider the following statement: “We can reduce calls into our contact center by 10,000 customers a month. This will result in savings of $30,000 a month. However, such a move will also reduce the likelihood of these customers buying from us again by 45 percent.” How many chief executive officers would approve such a proposal? Yet this is exactly the sort of loss you risk when you don’t measure impact on customer loyalty and fail to view the cost reduction in the context of the complete customer relationship.

On the other hand, our survey respondents ranked traditional human interactions at retail locations and contact centers as having a high degree of correlation with customer loyalty and future purchases. The reason was quite simple: These channels represent experiences in which customers feel that the company served them, added value, and delivered value unique to them.

In Self-Service 1.0, the entire approach was to treat customers as utilitarian. A customer zipped in, conducted business, and exited as quickly as possible: e-commerce as drive-through window. Now, a customer may spend much of her life online, but how much of that time is devoted to your site? Two minutes? One minute? She’ll soon wander off to Facebook and YouTube—where other companies can openly vie for her affections. If she sees no difference between the companies—if you’ve failed to delight her—she’ll take her attention and her business elsewhere. 

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