Healing The Pain: Responding To Bad Experiences To Boost Customer Loyalty

Healing the Pain introduces the concept of ‘Smarter Closed Loop Feedback’, helping companies maximise the ROI of customer feedback programmes and reduce customer complaints and churn.

Healing The Pain: Responding To Bad Experiences To Boost Customer Loyalty

The importance of customer experience as a driver of business performance is widely acknowledged and most companies make significant investments in strategic action planning tools to design and deliver experiences that truly meet customers’ needs.

 

More and more companies deploy Voice of the Customer (VOC) programmes or Enterprise Feedback Management (EFM) programmes to monitor the customer experience in real-time and enable timely interventions when customers face what we call “critical incidents”. Critical incidents are moments of truth in the customer experience that have the potential to make or break a relationship.

 

Most VOC/EFM programmes have case management systems that enable companies to manage critical incidents on a customer-by-customer basis and to intervene in order to “close the loop” on each piece of customer feedback.

 

But too often companies do not think strategically enough about the way they manage and respond to critical incidents. This can lead to interventions that are not targeted enough and therefore ineffective at mitigating negative customer outcomes such as bad mouthing or customer churn. In addition, ineffective case management systems lead to wasted efforts and resources, extra load on service staff and increased costs.
Closing the loop for every customer is hard to sustain as it is extremely costly and resource heavy. So how can companies prioritise action and understand how to best respond to customer issues?

 

Ipsos Smart Interventions Framework helps clients optimise interventions for maximum effectiveness by focussing on two key principles:

  • Not all critical incidents are equal. Companies need to discriminate between different types of incidents and prioritise interventions based on likely impact.
  • There is no “one size fits all” intervention. Different types of incidents need different types of responses, taking into account customer profile and past transaction history.

 

Algorithms based on a combination of factors, such as type of critical incident, customer profile or transaction history, can then be created to help companies deploy intelligent case management and closed loop systems that can suggest what the best next action and intervention is for any given situation. This can maximise the ROI of customer feedback programmes and reduce customer complaints and churn.


Healing the pain - combinaison of factors

Ipsos has carried out a survey* across 7 US sectors in the US in order to investigate the occurrence and impact of critical incidents and the extent to which companies are successful at mitigating negative customer outcomes following a customer issue. This paper presents our findings and the associated business implications.

 

Key findings are:

  • Treating customers with respect is the most suitable response among customers who had a critical incident relating to staff attitude. It will not only be less costly than any harder intervention, such as financial compensation, discount or freebie, but will be as impactful.
  • Harder interventions, such as financial compensation, discount or freebie, are more likely to be needed when customers have been overcharged although softer interventions will also have some positive impact.
  • It is very important for companies to understand the likely impact of interventions and to know when it is suitable to apply soft vs hard interventions depending on the situation.
  • Without an understanding of which critical incidents to focus on in priority and how to best respond to these incidents, companies might well be losing valuable resources, customers and money from fighting the wrong fight.

 

Key implications

  1. Closing the loop for every customer is hard to sustain as it is extremely costly and resource heavy. Companies need to prioritise effort and interventions by tracking and targeting critical incidents that have the highest impact on customers.
  2. Companies then need to understand how to best respond to these high impact critical incidents in order to maximise return on effort and investment.
  3. This will in turn enable the deployment of more intelligent case management and closed loop systems that will maximise the ROI of customer feedback programmes and reduce customer complaints and churn.

 

*10,061 interviews collected via Ipsos online panels in the USA across 7 sectors among customers who have experienced a critical incident in the recent past.

Customer Experience