More than 40 years ago Mick Jagger and Keith Richards wrote one of the Rolling Stones' biggest hits, "(I Can't Get No) Satisfaction." Although intended as an anti-commercialism, anti status-quo song, the lyrics have deeper meaning for marketers. While it's been well-proven that dissatisfaction can lead to customer risk and defection, trying to optimize customer satisfaction doesn't always affect actual behavior.
Some years back, management strategist Peter Drucker was quoted as saying, "To satisfy the customer is the mission and purpose of every business." Many companies use satisfaction as the core measure of transactional studies, principally to evaluate performance and often as a basis for staff incentive programs. More recently, customer recommendation has been touted as the ultimate question for driving growth. But, are these really the right goals, ones that, if achieved, will drive behavior? As customer experience analysts and stewards, we want and need the most reliable tools and techniques for identifying what shapes customer attitudes and behaviors.
Measuring customer loyalty and commitment
The actionable, basic template or "code" for understanding loyal customer behavior, at any life stage, is quite straightforward. It consists of defining the emotional and rational bonds that make up a supplier's value proposition. The emotional bonding elements are based on trust, a customer's sense of personal assurance in purchasing and getting benefit from using a company's products or support. Service experiences, for instance, play a big part here. Rational, or tangible, elements are those things that we associate with cost and functionality: original price, cost to maintain, convenience, accuracy, completeness, reliability, durability, and the like. Rational performance is satisfaction; and, typically, performance on the rational elements of value must be sufficient to build or sustain trust, which is the foundation for a more complete customer relationship.
Customer relationships with suppliers have a great deal in common with human relationships. So, analyzing loyalty and commitment can help identify the relative impact of each relationship driver: corporate image and equity, policies and procedures regarding customer transactions, service delivery levels and breadth of coverage, product performance (quality-based elements such as accuracy, reliability, completeness, timeliness, etc.), and costs, both actual and relative to competition. The sum of these components comes back, as they ultimately must, to trust and satisfaction conditions, leading to brand loyalty and commitment on a rational or emotional basis.
Loyalty and commitment are where we begin to see stronger correlation with such monetizing behaviors and key metrics as narrowed consideration set, usage frequency, and share of wallet. Recommendation is also an important measure.
Customer advocacy: loyal behavior driven by real-world factors
Advocacy is seen in such attitudes and actions as narrowed brand consideration set and strong brand favorability, but most particularly in positive, frequent, and voluntary informal communication on behalf of the preferred supplier, both online and offline. Advocacy behavior is at the crossroads of where we believe word-of-mouth influence is trending. McKinsey research, for example, has found that 20 percent to 50 percent of all customer decisions are directly a result of word-of-mouth communication.
Level of advocacy monetizes at a powerful and consistent rate, with true advocates giving significantly higher spend share to their preferred brand, compared to those customers who are more silent, ambivalent, disaffected, or outright negative. For example, in a recent retail bank customer advocacy study we conducted, customers identified as advocates are five times more likely to have added bank products and services for their primary bank over the competition, compared to those identified as alienated customers. Alienated customers added products and services at competitive banks, and at several times the rate of customers who were advocates of their primary bank. This type of significant, actionable polarity in findings between customers who were alienated and customers who were advocates sustained whether we were evaluating trust and relationship, touchpoint, or functional elements such as ATMs, or key monetizing elements such as future purchase likelihood.
If your company is conducting customer research, where do you go from here?
So, if satisfaction doesn't always satisfy, and recommendation can't assure growth, the name of the game is understanding and leveraging customer behavior that monetizes. This begs the question, is there one best approach?
Satisfaction, especially dissatisfaction, will help identify where a company's transactional processes and touchpoints are meeting expectations or putting customers at risk (and potential loss), and there's significant value in knowing that and being able to take targeted and appropriate action. Commitment and loyalty measurement will help determine what emotional and rational components of value drive customer behavior.
Advocacy questions and scoring will bring in the influence of neural, peer-to-peer communication; and advocacy evaluation will also help provide deeper insights into what is behind satisfaction, loyalty, and recommendation measure results. Taken together, they offer companies a detailed, highly actionable and user-friendly paint-by-numbers landscape picture of why new, active, and at-risk customers do what they do today, and what they are likely to do tomorrow.
As Keith and Mick might endorse, that's what I say
+ + + + + + +
About the Author: Michael W. Lowenstein, Ph.D., CMC, is executive vice president of Market Probe