Recently Bloomberg BusinessWeek released a report claiming that it pays to be a hated company. They found that customer satisfaction levels are inversely related to company stock price performance. The Colbert Report’s coverage of this story helped propel the world of customer service to the national forefront over the past few days.

While some leading experts in the customer service space have been quick to highlight flaws in Bloomberg BusinessWeek’s analysis*, for others this comes as little surprise. The relationship between customer satisfaction and commercial outcomes has long been known to have little correlation.

Based on years of research in the customer service and support space, much of which is detailed in our latest book, The Effortless Experience (Penguin/Portfolio), Bloomberg BusinessWeek’s findings don’t come as a huge surprise. We’ve analyzed over 125,000 unique service interactions and over 5,000 frontline service reps and have come to understand that companies in pursuit of the ideal customer experience are often overlooking far more meaningful drivers of the customer experience in the process – the very elements that materially impact customer loyalty and drive commercial performance.

In no particular order, here are the top five service myths related to the ideal customer experience…

Myth #1: Delighting customers in service interactions drives loyalty.
Reality: Simply meeting baseline customer expectations in service interactions drives the same loyalty benefit as exceeding expectations.

Our data shows very clearly that delighting customers, while it may feel like the “right answer” does not lead to commensurate loyalty. In many cases, those grateful letters that customers send detailing how they were delighted are followed by no further advocacy, no incremental spend, and in many instances a phone call to cancel their service or return their product. The next myth details why this is the case…

Myth #2: Customer service positively impacts customer loyalty.
Reality: Customer service largely drives disloyalty.

Most leaders think of customer as a single “pie.” The reality is that loyalty really behaves like two separate pies – one for positive gains in loyalty, and the other is disloyalty. The positive pie is driven by things like the brand, product quality, and value. The negative pie, however, is dominated by customer service. The reason is that service engages customers who are already in a sub-optimal state of mind. At the least, they have a question. More commonly, they have a concern or an issue. The primary goal of customer service is to mitigate disloyalty, not drive positive gains in customer loyalty. For those who are sports fans, the best analogy here is that customer service is best positioned to play defense, not offense.

Myth #3: Customers want to be showered with discounts, givebacks, and WOW moments.
Reality: Customers want ease. Getting back to their busy lives quickly matters more than anything.

The greatest driver of disloyalty is the amount of effort you require your customers to put into their service experience. Customer effort includes repeat contacts, repeating information, channel switching (e.g. starting in Web and ending up on the phone), transfers, policies and procedures, and the general hassle factor that most service interactions create.

Simply stated, reducing customer effort is the most important thing your company can do to better serve customers.

Myth #4: Your customers want to talk to you.
Reality: Your customers would much rather self-serve.

Most companies manage their service operations to the preferences of a 77-year old customer. That’s the age where customers prefer the phone 2.5x more than self-service, which is the ratio that most executives believe customers prefer to interact with their company. But consider that nearly 60% of all phone interactions saw the customer start on the company’s website. Companies are forcing customers to switch from self-service to phone – and creating significant customer effort along the way. The trick isn’t getting customers to try to self-serve, it’s getting them to stay in those channels. It’s what customers want, and what our CFOs want, so why aren’t we focused there?

Myth #5: Customers will be satisfied by having many choices in how they interact with a company.
Reality: Customers want to be guided to the simplest, easiest resolution possible.

Only 16% of customers are steadfast in their service channel preferences (the majority of who view the phone as the ONLY option for their service needs). The remaining 84% of customers prefer guided resolution, where a company essentially recommends the best way to resolve an issue. Herein lays the problem however… Most service websites have between 25 and 45 initial choices for a customer to make when trying to resolve an issue – each choice equally right or wrong. The lowest effort websites aren’t the ones trying to “keep up with the Joneses” and instead focus on simplicity and clarity. Amazon.com epitomizes guided resolution, where customers select their issue in a series of 3 drop down menus and are then prompted as to the best channel to interact with Amazon. What’s more amazing, is when phone is recommended, the customer is asked to input their phone number and a rep from Amazon calls and immediately starts to resolve that specific issue.

*[Admittedly, there are a LOT of other variables that drive stock price performance, so we also agree that these results should be taken with a grain of salt as it’s unlikely that the analysts controlled for extraneous variables like operational efficiency, impact of supply chain and materials, sales and marketing investments, not to mention analyst coverage, etc. across the analyzed companies.]