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Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

After recently reviewing the Forbes customer value/customer loyalty interview of TD Bank’s CMO, Vinoo Vijay, one of his areas of emphasis (in addition to frequent customer surveys and generating insights from employees) was the resolution of problems. This is extremely important, because it speaks to how more progressive companies endeavor to make experiences less painful, if not more fulfilling and memorable.

At the outset, I’d like to applaud the active inclusion of employee input and insights into TD Bank’s customer experience program design. Here’s  my comment from an interview given about ten years ago: “You cannot create, or sustain, customer loyalty without committed employees. The key is to focus on developing and supporting employees so that they, in turn, focus on the customer. Ideally, you want every employee to be an ambassador. Employee ambassadorship is a framework for linking employee commitment to business results by emphasizing the need for the entire organization to create unique, value-add customer experiences. Optimizing customer experience is everybody’s job.”

Now, as to problem resolution, from the Forbes interview, my read (and as indicated by Vijay) is that principally this meant the elimination of all customer transactional and relationship pain points. And, this perspective got me to thinking: Irrespective of B2B or B2C industry, is the fundamental meeting of basic customer expectations, such as a pain-free transactions or experiences, ever sufficient to drive loyalty behavior? And, on a related note, is complete satisfaction ever enough to build and sustain loyalty behavior?

Customer Satisfaction Doesn’t Drive Loyalty Behavior

Let’s begin with creating satisfaction in the form of meeting basic customer product and service needs.

The surveying, such as referenced by TD Bank, to identify what drives satisfaction-reducing pain will provide superficial guidance on emotional drivers of desired customer behavior. As quoted by Vijay in a CMO.com interview:

“Particularly in financial services, brands must be grounded in tangible differences. For example, at TD Bank we are always looking to build on our unique differences that set us apart from other banks, from the big -– like being open longer than any other bank –- to the small -– like having pens that are not chained to a counter. These are hard investment decisions that come from a deep understanding of customer pain points and a commitment to be better.”.

Though these tangible issues have some emotional connection, they are still fairly fundamental value components. And that’s the first issue. Customer satisfaction is benign and passive; and, it is rarely sufficient to generate, or sustain, loyalty behavior. It’s understandable why TD Bank’s marketing takes this approach to value. In the case of consumer banking, customer experience research has shown that the expectation bar is low enough that even providing slightly enhanced tangible element experiences has been sufficient for TD Bank’s “Banking Human” campaign to have been strategically successful.

However, in most B2B or B2C industries, is simply reducing or eliminating pain points, i.e. meeting experience requirements so that the customer is satisfied, enough? Satisfaction has always been about what we understand to be total quality expectations in products and services, as perceived by the customer.

Unfortunately, satisfaction, which mostly measures attitudinal response to the functional and tangible elements of value delivery (time or timeline, accuracy, completeness, suitability, price, ease/convenience, functionality, etc.), such as Vijay has identified in his interview, has been proven to have little impact on, or connection to, actual downstream customer decision-making. Even total quality icon W. Edwards Deming believed that satisfaction was an ineffective metric for truly understanding the effect of expectations on customer actions.

Unexpressed Complaints: An Untapped Opportunity

What about the customer problems and/or complaints, aka pain points, that are never expressed to the vendor? As reported over the years, it has been estimated that only about 2 to 10 percent of B2C customers actually air their experience grievances to the supplier. Satisfaction-oriented companies never ask customers about complaints they haven’t expressed, and that’s the second issue. Some industries have notably high levels of customer complaint silence: financial services, food and beverages, pharmaceuticals, and high-tech.

Why don’t customers complain?

• They’re busy, and they can’t or don’t want to take the time

• They consider the complaint interaction a hassle and an annoyance

• They see no direct value or benefit to them in making the complaint

• They don’t think the supplier will do anything about the complaint

• They can get what they want from an alternate supplier, so they switch

Further, another research company has found that over 40% of the customers in their business-to-business database who had a problem or complaint never informed the supplier about it. Their reasons for not expressing their complaints were remarkably similar to those given by consumers. We’ve seen other studies suggesting that, depending on the industry, unexpressed B2B complaints may range as high as 80% to 90%, so this is hardly an exclusive B2C issue. Even though the rate of expressed complaints is higher in the business-to-business world, the lost revenue potential of unexpressed (and, so, unresolved) complaints is significantly greater there because of the lifetime value of each customer.

Recalling statements made in the TD Bank interview put me in mind of a pivotal piece of very revealing earlier financial customer complaint research. In the 1990’s, Banc One conducted a study of the loyalty leveraging effect of expressed and unexpressed complaints on its retail business customers. The bank found that about half of these customers had service complaints. Of those with a complaint, only about half had actually expressed them to bank employees. In other words, fully one-quarter of the complaint picture was missing. Further, those who had not expressed their complaints were far less likely to continue their relationship with the bank than those who had registered a complaint and had it positively resolved. And, of course, those with neutral to negative problem resolution were clearly at risk.

Here is the summary of what their study found within the customer base:

• No Complaint(s) (50%): Retention Intent, 82%; Recommendation Likelihood, 89%

• Registered Complaint(s), Positive Handling (12.5%): Retention Intent, 87%; Recommendation Likelihood, 91%

• Registered Complaint(s), Neutral/Negative Handling (12.5%): Retention Intent, 37%; Recommendation Likelihood, 35%

• Unregistered Complaint(s) (25%): Retention Intent, 55%; Recommendation Likelihood, 61%

The potential for complaints to negatively impact customers’ future purchase intent and recommendation should never be overlooked. In loyalty research for a B2B client, a major manufacturer of paper and related products, it was determined that close to 40% of their high volume accounts had serious performance complaints. These complaining customers were fifteen percent less likely to be positive about continuing to purchase from the client than those without a complaint. Other studies show similar negative loyalty effects of complaints.

Customers experiencing inefficient or insufficient resolution to complaints are not only less likely to repurchase or recommend from that supplier, they will spread their negativism – telling anywhere from two to twenty people about their experience in direct word-of-mouth, and significantly more via mobile devices and the Internet. And, as we’ve learned, the ‘long tail’ represented by negative online postings means that consumers will see opinions of ‘badvocates’ over a considerable period of time. With numbers and results like these, it’s little wonder that, left poorly handled or totally unresolved, complaining customers can sabotage even the most carefully crafted marketing, social, or customer loyalty program.

Vijay concluded his CMO.com interview by stating:

“We are focused on making it ridiculously easy for consumers to find, assess, buy and use our banking products… The incredible opportunities to engage with consumers that digital, mobile, social and data create are game changing. But, as a marketer, the most important thing we can do is ensure our brands continue to build on and follow through on their promises. Only then will every touch point with the consumer… turn into a real positive.”

Wise words, to which most marketers would easily agree. That said, I’d respectfully advise TD Bank and any B2B or B2C company interested in optimizing customer behavior that
a) more needs to be done than just understanding what satisfies customers, especially where emotion and memory are concerned, and
b) generating (and resolving) unexpressed complaints, i.e. unsurfaced pain points, have such significant power that they should have equal priority with all other areas of stakeholder insight.

If asked for prescriptives, and fully recognizing that most companies don’t actively look to fix what they perceive as working well, here are two things I’d suggest:

1. Beyond  transactional pain point reduction or elimination, identify (on an emotional as well as functional level) what makes for positive, differentiated, memorable and sustainable experiences that drive long-term loyalty behavior.

2. Following the Ishikawa Five Why concept of delving into customer behavior, identify complaints that haven’t been registered, determine their severity (as well as what has kept the complaint(s) from being surfaced), and address them

Republished with permission from CustomerThink.com