Recently an article of mine was published with the title: “Market research as we know it is unsuitable for the digital economy” and received a great deal of attention, some of it negative. One of the comments called my article insincere and aiming for attention, i.e. pick a controversial title even if you do not believe in what the title says and run with it in order to draw attention to your piece. Given that experience, I would like to assure all readers of this article upfront, that I truly believe there are better customer metrics for business success than customer satisfaction or customer loyalty on their own.

Let’s look at the evolution of customer satisfaction measurements and hopefully, if we understand the history, we will also be able to interpret the present and maybe extrapolate into the future.

In the 70’s, the market research industry was measuring customer satisfaction. Then we realised that customers may defect from a brand even though they are satisfied, because a better proposition came along. The flip-side of the coin is that they may continue buying a brand even though they are not satisfied, due to high switching costs. In the 80’s, we moved to measuring “perceived quality” a term soon to be replaced by “perceived value”. In the 90’s, measuring customer loyalty became …the thing. The decade after that – the turn of the new century – measuring customer commitment was in vogue.

What brands are after is more than just repeat purchasing they want an emotional bond with their customers. An analogy I liked a lot at the time and still do was with the marriage between two people; staying married indicated loyalty but it did not say anything about whether there was love in the marriage (read commitment). This decade is all about customer advocacy. Social media has helped amplify the hype about customer advocacy which can be systematised in a brand ambassador programme. A key to the success of organisations during this new era is to be able to amplify customer advocacy. In order to do that, a precondition is to understand to what extent customers are emotionally bound to a brand and whether they are willing to share their delight with their friends and networks online.

In my view, it is okay to call the one metric customer loyalty, commitment or advocacy as long as all three are included in the measuring and the analytics process in order to provide the one index according to which a company can measure the customer experience and its performance. Having said that, it is not enough to only have a single metric or index (like the net promoter score which is based on people recommending the brand), it needs to explain why customers feel and act the way they do, but also it needs to provide specific ways to improve performance.

In a customer loyalty programme for the Young Presidents Organization (YPO), DigitalMR measures the loyalty and the “love” of its members (the customers) for the organization every 12-18 months. YPO has more than 20,000 CEOs as members in 130 countries so the survey has to be representative and account for the different cultures and the type of sophisticated customer they are, of a very complex product: the YPO membership. The last 15-20 minute survey was completed by 4,000 members – the largest CEO survey ever done on the planet. A customised model has been developed, underpinned by a customised questionnaire that measures the interactions of the members/customers using multiple touchpoints. It also measures emotional and rational perceptions along with the brand image and allocates the customers into 4 segments:

  • Strongly loyal
  • Favourable
  • Wavering
  • At risk

Using advanced analytics the loyalty/commitment/advocacy (LCA) model investigates what are the drivers of LCA and how the organisation performs against those drivers benchmarked against the average, or in other cases, benchmarked against best in class competitors.

The outcome is an action matrix that identifies the key priorities for improvement down to the level of key touchpoint attributes, along with the secondary priorities and the key strengths to maintain.

Figure below demonstrates the causal pathways from experiences with the brand to behaviour.

* Loyalty=Loyalty+Commitment+Advocacy

This analysis has provided a path to member loyalty improvement. Member loyalty to the organization can be a predictor of behavior in terms of retention, engagement, responsiveness and participation. Ratings higher than 70% are a good score. Organizations aim to grow customer loyalty because the index has a direct impact on long term health, vitality and financial results. Martha Walker the Global Director of Research at YPO said: “The deeper insight and predictive value of the Loyalty Model drove a focus of resources with new precision and confidence to diminish the numbers of members wavering or at risk in sustaining membership that also resulted in measurably enhancing the satisfaction and value of the membership experience for all members.”

If there are still doubts about the sincerity of the title of this article, debate is welcome and expected!

Michalis A. Michael

Michalis A. MichaelMichalis A. Michael (@DigitalMR_CEO) is the CEO of DigitalMR an online market research specialist company with proprietary private online communities and social media listening platforms for insights, co-creation and customer advocacy. For more content from Michalis and his company visit the
DigitalMR eBook library or their Blog.

Post Views: 585