Conducting a business linkage analysis study can be difficult, almost daunting, given the amount of time, money, and—perhaps most important—variables involved. Details of how a company is run, and the products or services it provides, must be examined in minute detail for the results to have any real relevance. Canada Post used linkage analysis to define whether there was an association between attitudinal outcomes (such as quality, value, likelihood to recommend), behavioral outcomes (purchasing behavior), and business outcomes (revenue, growth rates, share of wallet).
Kurt Pflughoeft, Ph.D., senior vice president of research and development at research firm Market Probe, which conducted the Canada Post CVI Linkage Analysis, says it’s imperative to define both the relevant sources of data (customer satisfaction or loyalty, employee satisfaction) and the relevant business measures (revenue, sales, turnaround time) to produce a useful analysis. Doing so led to finding a link between customer attitudes and behaviors and business outcomes. “The Canada Post/VentureOne analysis we ended up with is one of the strongest I’ve ever seen,” Pflughoeft says. VentureOne is Canada Post’s small business loyalty program.
It’s hardly a quick process, he adds, noting that the ongoing analysis has taken several years. “It makes a difference if you’re dealing with an end consumer in a highly competitive market, [and] a product or service they need on a frequent basis,” he says. “In that case, a couple of years’ worth of data can be sufficient, and can be tracked on a weekly or monthly basis.”
Analyzing larger companies offering products and services that usually are not purchased on a per-customer basis often can take longer. “Also, the impact of larger products may suffer from a lag effect,” Pflughoeft says, “or you may extend credit to a large customer and actually have negative revenue for a particular month.
“It’s generally nice to have three if not four years’ worth of data for what we were looking at in this instance,” he says, referring to the Canada Post linkage analysis.
Examining long time periods cuts down on other variables as well. “There are lots of theories around whether behaviors are truly reflective of attitudes,” Pflughoeft says. “In general, the correlations can be kind of low. As an example, someone may say they want to switch jobs because the one they’re in isn’t challenging or is boring, but a lot of times they don’t actually make that switch due to external factors: the kids are in school, the family doesn’t want to move, and so on.”
For the Canada Post/VentureOne analysis, Pflughoeft says three main attributes were examined: value, quality, and advocacy. “Depending on which line of business you’re focusing on, those three attributes may wax and wane in order of importance, with one being more valuable than the others,” he says.
“Advocacy in parcels is very strong, which is somewhat expected because it’s a more competitive environment,” he continues, noting that VentureOne is in direct competition with DHL, FedEx, and UPS. “With ad mail, it’s not as competitive, so you look more at quality in terms of what you’re tracking. A lot of thought went into their measurements.
“I give a lot of credit to Janet,” he adds, referring to Canada Post’s director of customer value management, Janet LeBlanc. “She and her team came up with the right metrics to track how their organization is doing.”
For her part, LeBlanc gives credit to Canada Post’s upper management for going along with such a time-consuming project. “A key challenge for us was to prove that this was not an expense, but an investment for the organization,” she says. “Linkage analysis provides better clarity to set strategic priority, make investments, and realize ROI.”