Calculating the Customer's True Loyalty Score

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Customer Experience
Customer Experience
Companies must move beyond customer satisfaction metrics, using social sentiment and behavioral observations to accurately assess the customer's true brand loyalty.

Measuring loyalty means morphing moods into metrics. By quantifying qualitative data, brands attempt to associate subjective human behaviors with objective conclusions so they may assign every single customer a number that signifies their likelihood to return and recommend. However, while nailing down concrete sentiment measures can be essential to future strategy development, forgetting the individuals behind customer loyalty could potentially leave many companies blowing in the breeze.

Today, companies typically look to satisfaction metrics as their primary measure of loyalty. But, as the online and social spheres continue to grow their influence, metrics such as Net Promoter Score rarely provide a wide view of the customer. Likelihood to recommend no longer reflects long-lasting loyalty.

"Transactional loyalty metrics such as customer satisfaction and win/loss metrics are good standby measurements, but ultimately cannot paint a full picture of customer loyalty," says Rohit Kapoor, senior director and principal, business process outsourcing, customer operations at Capgemini. "For example, customer satisfaction is a good indicator as low satisfaction predicts a loss of customers, but high satisfaction does not necessarily lead to customer retention."

As Michelle de Haaff, vice president of marketing at Medallia, notes, companies must go beyond the score to determine the "why" behind what drives and doesn't drive customer loyalty. Behavioral data and observations stand at loyalty's core, for scores only present the general sentiment, not the insight necessary for proactive change.

"It's not just the score [that matters]," de Haaff says. "It's the call back from the store manager to apologize for a bad experience. It's the account manager who knows their account was not satisfied with the support process and who engages them to fix it. It's the company that brings the distribution and service teams together to change the returns process which customers are complaining about across the board."

Because loyalty differs from brand to brand, each company must establish its own measures based upon how their customers interact with the brand. There's no set of rules when it comes to loyalty metrics, meaning brands must determine what behavioral insights are essential for future success. Unfortunately, there's no one-size-fits-all guide, but every brand should focus their efforts on building relationships, not just financial returns.

"The industry needs to get back in touch with its roots," says David Andreadakis, vice president of loyalty strategy at Kobie Marketing. "Most companies are focused on the economic side. They may say they are all about customer relationships, but only when it suits their interests. They must modify their own behaviors to turn loyalty back into a true relationship, not something purely financial."

Behavioral Loyalty vs. Attitudinal Loyalty

Loyalty can typically be divided into two subsets: behavioral and attitudinal. When consumers remain loyal for behavioral reasons, they do so out of laziness because, in such cases, switching brands or service providers would be more of a hassle than it's worth. Those who remain loyal for attitudinal reasons do so because, over time, they have come to trust and rely on the given brand, forming a sort of moral obligation to maintain this long-term relationship. However, with today's unstable market, many consumers will opt to pursue the best deals and services no matter their prior affiliations.

While repeat purchases certainly signal loyal behavior, there's still a chance that customers may churn. Instead, companies must observe these behaviors over time to ensure they rectify any issues that may arise during the customer journey. By doing so, they can curb the probability of attrition. Those who defect often display similar behavior patterns, which act as warning signs if caught soon enough. Companies can quickly intervene, preventing churn and strengthening the customer relationship in the process.

When companies measure customer satisfaction, the extremes are often the only consumers to reply. People usually need motivation to provide feedback, meaning most of the input received comes from those who either had an exceptional experience, or those who wish to complain. As Cesar Melgoza, CEO of Geoscape, notes, those who do respond aren't necessarily worth as much as those customers who didn't participate. Customer satisfaction surveys fail to get at the heart of loyalty measurements, for customers must fill something out, and what they say doesn't always reflect what they really do. In terms of loyalty metrics, actions speak louder than words.

Restaurant.com's New Recipe for Loyalty

For Restaurant.com, loyalty has become an essential companion on the company's journey toward increased customer engagement. Loyalty stands as the foundation for its vision to create an engagement score that encompasses all interactions throughout the customer lifecycle. Tracking behaviors, such as purchase habits and social interactions, opens up the opportunity to recognize and reward customers accordingly.

By focusing on establishing the basis for an engagement score, Restaurant.com acknowledges that understanding the behaviors that drive loyalty often takes time. While metrics, such as lifetime customer value, are important, the company looks beyond these central measures to develop a more comprehensive view of the customer and build a deeper relationship. Tracking "likes" on Facebook and "follows" on Twitter provides insight into the social sphere, while Web observations allow the brand to see how customers are interacting with the site directly.

Currently, Restaurant.com rewards customers from a social perspective. Each interaction offers a certain number of points, while also earning the user a badge. For instance, by "liking" Restaurant.com on Facebook, users receive the "Thumbs Up" badge, while collecting a complete set of badges allows the user to satisfy an entire mission. Customers who connect with Restaurant.com across all social networks, for example, will complete the Social Maven Mission.

"The recognition is purely virtual," says Brent Carter, vice president of customer retention at Restaurant.com. "We have incorporated what we call 'surprise and delight' functions, which send a message out congratulating people when they achieve certain levels. What makes these platforms so appealing is that those social recognitions and rewards are non-monetary, making for very high ROI scenarios."

Focusing on simple gamification techniques provides the brand with an inexpensive way to gather behavioral insight and engage consumers in ways that encourage their return. With little upfront investment, Restaurant.com can slowly learn what matters most to their customers, inevitably incorporating monetary rewards that will only enhance loyalty and engagement down the road.

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EXPERT OPINION