Wanna Buy a Checking Account?
A recent study from Thunderhead Communications shows that loyalty to financial services companies hovers in the 16% - 17% range. Further, more than six in ten financial services customers say they are actively looking to switch banks or insurance companies in the next year or so.Yikes. With numbers like that, and with the economy facing a strong headwind, I wouldn’t be surprised if prescriptions for Prozac have increased in New York and Charlotte.
Not surprisingly, the conclusion of this study was that financial institutions need to communicate more often and effectively with their customers. A shocking conclusion given that Thunderhead provides those services.
But before discounting this study as self-serving, there were some interesting and unexpected nuggets within.
The study indicated that the vast majority of consumers said they wanted the option of receiving communications via email, and two out of five said they preferred to get info like this from personalized web portals.
Here’s the biggie: half of the consumers surveyed said that it was “very important” to receive communications in real time. Even if the other half all said this is “not at all important,” if it was feasible to make half of your customer base happy and this was cost effective, wouldn’t you jump at the chance?
Somewhat less believable, but interesting just the same, some number of consumers actually want offers or communications directed to them on social networking sites like FaceBook or MySpace. Imagine chatting with your peeps on MySpace and MegaBank pops in and offers you a quarter point bump on your savings interest rate if you and ten of your friends sign up today.
This is a new age indeed.
Lest we lose focus on what’s important, however, the big finding here is the large number of consumers who don’t feel any loyalty to their financial institutions. With interest rates still high, higher approval standards for loans, and the proliferation of more creative “non-interest income opportunities” (i.e., fees), most financial services companies wear a black hat these days.
Communication with customers is often a critical element for creating and maintaining customer relationships. Companies that study their own customers, and evaluate what’s best to measure for their businesses will be able to confirm for themselves whether any of these recommendations or findings are relevant for their customer bases.
In the meanwhile, I’m going to print out this blog entry and use it to wrap all of the new Prozac and Zoloft prescriptions bottles in major financial centers throughout North America.
Repeat Business is Online Retail’s Core Customer Metric
In a study released recently by MarketLive, research confirms the importance of repeat business to online retailers. Many online (and off line) retailers focus strictly on acquiring new customers, often in the mistaken belief that volume is the name of the game.This work indicates that it’s the size of the online basket that makes all the difference. New customers buy 10% less than existing customers, and are less engaged with the retailer and the buying process in general.
Not surprisingly, marketing budgets for online retailers reflect this disparity, with more than half being spent on acquisition, and only about 20% being spent on retention or loyalty.
Yet another reason why knowing what’s best to measure is more important than traditional marketing methods or metrics.
Social Media Usage: Part of a Robust Core Customer Metric?
A study released by the Society for New Communications Research discusses how Social Media (i.e., blogs, online rating systems and discussion forums) is not only an important bellwether for consumers making decisions about a brand, but also as an indication of loyalty to a brand.Consider this scenario: You’ve just purchased the cool new MyVu video glasses and you decide that it is better than sliced bread. Likely, before making this purchase, you used an Internet search engine like Google to see what others were saying about this new device.
Your results show reviews on engadget and Gizmodo as well as some for sale listings on merchant sites like Amazon.com. Sure enough, clicking through to any of these not only provides you with an editorial review but also user comments and ratings. Based upon the information you’ve gleaned, you plop down your credit card and buy the MyVu glasses.
A week or so later, after you’ve come up for air from watching back-to-back movies on your new device, you decide to share the love. Back to the search engine, and you put in your two-cents worth at all of the sites that you found valuable for your choice information.
This example illustrates the burgeoning power that Social Media can play in the purchase decision. But if you were an online mogul, and your business’ success rests on how well you do with sophisticated customers who rely on the Internet for their info, how can you ignore the power of this medium?
Through the use of Internet scraping and scanning tools, text analysis and some nifty algorithms, it’s entirely possible to mine Social Media sources for suggestions of your brand’s health. This could be incorporated into your Brand Health Index or used in convergent analysis to convince Finance, senior management or venture capitalists that you’ve got a hot thing.
Social Media seems like more than a fad, and judging from its ballooning usage, it is becoming adopted by more than just gossipy teenagers.
How do you see Social Media being used in your Voice of the Customer efforts? Do you think that information gleaned from Social Media might be useful as part of your company’s Core Customer Metric?
Business To Business Core Customer Metrics
The Corporate Executive Board recently studied Customer Loyalty from a business to business perspective. One of the major conclusions is that, in many cases, switching business to business suppliers is so hard to do, the fact that a customer is buying from you (behavioral loyalty) doesn’t mean they are emotionally invested in that behavior. Also, purchase decisions are generally shared among multiple people, and still more people are internal influences.
While not shocking or surprising, it is true that much less to do is made about building loyalty among business to business customers than among business to consumer customers.
Thinking through some of the core measures that are prevalent today, most seem to be not especially well-suited for B2B applications. For instance, the much discussed Net Promoter Score relies upon the the predisposition of loyal customers to want to recommend the companies they like. While it makes sense for cars, audio equipment, movies etc., I’m not sure that physicists go to cocktail parties and talk about what brand of test equipment they’re using. Or maybe they do, and that’s why I’ve never seen a physicist at a cocktail party.
The article raises some interesting nuances worth thinking about. For instance, B2B surveys that focus on the end-user in the company are more predictive of loyalty than are those that focus on decision-makers. While this may seem simplistic, most B2C surveys focus on the household decision maker’s attitudes (e.g., Dad buys the soap) rather than the users (e.g., everyone in the house uses the soap).
Apparently there is no magic bullet available for B2B companies, just as there isn’t one for B2C. The most important distinguishing characteristic between successful and less successful companies will be the PROCESS they went through to arrive at their core customer metric — not the metric itself.
What B2B loyalty metrics do you think are most effective for a particular company or industry and why?
Share ThisZen and the Art of Motorcyclist Hospitality
I love it when my personal and professional life converge.The Wise Marketer reports that Harley-Davidson and Best Western are co-promoting a loyalty program aimed at H-D motorcyclists. Benefits include, according to the article, “special wipe-down towels at check-in, access to a bike wash, tar remover, lip balm and sun tan lotion” among other things.
Why is this so cool (other than the convergence of my favorite pastime and my favorite business topic)? Because Best Western has delved deep into segmentation or other market assessment work and came up with motorcycle touring as an opportunity. The loyalty of Harley-Davidson customers is renowned throughout the marketing business. Many companies would hand off first born progeny to have access to that loyalty.
However, among the many co-promotions cooked up by companies and The Motor Company, most simply use H-D logos, or make weak attempts at biker chic to win over the notoriously skeptical H-D customer. I will tell you from personal experience, people on motorcycles ARE often discriminated against at public conveniences. Seems that the biker mystique has its positive and negative edges.
So, when Best Western announces that they are now “biker friendly” and promise tangible benefits to motorcycle tourists and travelers, they will quickly find out whether their customer experience is up to the road test of real bikers.
If they meet this challenge and provide the kind of customer experience they promise, word of mouth will surely do the hard work of validating this brand promise in the motorcyclist community. Other hospitality chains will follow suit, perhaps going after the same Harley-Davidson customer, perhaps going after different parts of this travel segment. Regardless, Harley-Davidson customers win.
Conversely, if Best Western drops the ball and are unable to meet expectations or deliver poorly, they will likely do themselves long-term damage, as the word of mouth spreads that Best Western is a “poser” (the worst insult a motorcyclist can level at someone else).
It will be interesting to see how Best Western keeps track of their success in this new endeavor. Clearly loyalty will be a core customer metric to watch and measuring positive impressions or intent among prospective customers will also help gauge how well they are doing.
Share ThisCustomer Lifetime Value (CLV) as a Core Customer Metric
The latest edition (3 April 2008) of The Wise Marketer newsletter has some nice discussion regarding the idea of Customer Lifetime Value as a Core Customer Metric that is predictive of profits. (Sign up for your own copy at the link above, or if you have some cash laying about, about $2,300 in the US, you can buy their report The Loyalty Guide for yourself)Not surprisingly, the concept relies upon both current and expected information for its calculation. First, one assesses the current value of a customer (revenues less costs) for a single financial period. Next, using various techniques for projecting this information, you calculate the expected annual value of this customer for each subsequent year, as well as an expected tenure.
Given the “start-up” costs for many industries (acquisition, product cost, servicing and fulfillment costs, etc.), it isn’t a shock that after the initial few periods of amortizing these start-up costs, even modest customers can become very profitable over time.
The Wise Marketers point out that this calculation differs greatly by three important 
factors: 1) the industry Sector; 2) the product; and 3) the period of analysis. Even if your calculation of the Customer Lifetime Value isn’t 100% accurate, it does give you a way to compare various customers in your customer base. If you are in an industry that can provide differentiated service, this allows you to guide your front-line employees to provide better service to customers who have higher CLV’s.
The weakness, of course, is that CLV relies upon a lot of assumptions about tenure, future product purchasing and future costs. A 30 year old woman with a low financial services wallet might have higher costs and lower revenues for you today, but over her lifetime, IF you keep her, and IF you get your fair share of her wallet over time and IF she doesn’t cost you and arm and a leg to service, should be a good investment. But those are some pretty big ifs. And, once you’ve decided that your high CLV customer is worth your time, what aspects of her relationship do you need to actively manage in order to keep her a customer? The crux of a Core Customer Metric is that it is one that isn’t just predictive of the financial outcomes, it inherently includes some relative measure of stickiness or loyalty.
The best Core Customer Metric not only points to which customers are sticky or loyal, but which aspects of the Customer Experience are critical for increasing or decreasing the metric.
(Graphic used with kind permission from Adelino de Almeida’s blog: Profitable Marketing http://adelino.typepad.com)
Share ThisThe Value of Detractors
Maybe mushrooms and Luddites have never heard of the Net Promoter Score, co-developed by Fred Reichheld and Satmetrix. But other than those fungi and sabot-tossing naysayers, most of the rest of us in marketing have.Satmetrix recently released a study that puts an economic value on Promoters and Detractors in a business. The article, found here, doesn’t give much detail about methodology, but assuming it’s solid, the findings rely upon Referral Economics (how much a referral — or lack of one — is worth) and Buyer Economics, the more traditional customer value info you might expect.
The article I saw gives an example from the computing hardware industry. In it, each Promoter is worth an average of $2,634 — $203 more than the typical customer. Detractors, on the other hand, are worth $1,457 on average — about $158 less than the typical customer.
The Referral Economics piece is interesting. Each Promoter is responsible for contributing 0.5 of a new customer (acquired through word of mouth, and important caveat, I presume), while Detractors COST the company 0.84 of a customer (with the same caveats, but the article doesn’t elaborate.
I like the idea of segmenting and valuing the customers you have, and the notion of associating some amount of new business to referrals (and reciprocally, subtracting some amount of business for bad word of mouth) is somewhat intuitive.
The hard part, as always, is knowing which customers are going to promote or detract your company BEFORE they do so, so that you can intervene with the potential detractors and ensure continuing good experience for promoters.
In companies that rely heavily upon word of mouth for their new business, this will be exciting news. For those that don’t, a solid investigation into which core customer metric is their leading indicator of business results will remain the task at hand.
Share ThisIs It Really the “End of Customer Service”?
Time Magazine recently published a special called What’s Next 2008. Within the normal discussions regarding trends were its list of 10 Ideas that are Changing the World.Number 2 on this list was “The End of Customer Service.” They pointed to self service lines in airports, grocery stores, hotel lobbies and movie theatres.
But is this really the “end of customer service?” I think most people would point out that in most of these examples, these are simply places where we conduct a transaction, and where human intervention is often slower than machine help in many instances. More importantly, these are places where people wait in line to transact. Waiting is not something we are good at.
So, while Time Magazine might be calling for the end of Customer Service, I see that we are simply automating routine tasks so that people don’t have to wait. I sure don’t relish standing in box office lines, check in lines at the airport or behind a person with a cart full of groceries when I just have my two items to pay for.
More importantly, and more germane to this blog, how will we measure the Customer Experience when parts of the experience are automated?
We already face this in many industries, particularly financial services. Banks have offered ATM’s and online banking for a while now. The same with airlines. So many passengers check in before they get to the airport that many do not even go to the ticket lobby unless they need to reprint a boarding pass or check a piece of luggage.
It is sensible that automation be measured when we are measuring the Overall Customer Experience, but what are we measuring when we do so? As many banks do, they look at problem handling as a key indicator of whether customers are getting what they needed to do done. Customers are probably OK with your automated solution so long as they can complete their task. When they aren’t, it is pretty important that you provide a way to fix the problem.
As more things become automated, it will be interesting to see what Core Customer Metrics are being used to understand the changing landscape of the Customer Experience. If you have a good example of how this is done at your company, please share.
Share ThisDon’t Choose Your Core Customer Metric Using the “Wisdom of Crowds”
Seni Thomas wrote a thought provoking piece here decrying the current blogging world’s lack of ability to predict things that would be a fancy-tickler. The posting made me think about the crowd mentality that seems to be prevalent in the marketing research industry, particularly related to choosing a Core Customer Metric that 1) is predictive of business results and 2) can be easily communicated to the troops.We continue to receive frantic pleas from clients to explain why or why not the Net Promoter Score might be the metric for them. After talking this poor researcher off the ledge and listening to their business issues, inevitably, this is what is occurring with frequency in American corporations.
The CEO/ CIO/ CMO/ CXO wakes up one lazy Sunday afternoon and reads how GE or Enterprise Rent-A-Car or American Express is using the NPS. This well-meaning executive takes the torn-edged article from the Wall Street Journal, or Marketing News or some other paragon of business wisdom and hands it to someone in the organization, with the instruction to “make this happen.”
On down the slope this goes, until it lands on the desk of the hapless researcher, with the edict, “management wants this.”
The huge sum of money the company is spending against capturing the Voice of the Customer is clearly at stake. The company is already asking the Recommend question, so what might be the harm?
Probably none, since people who work with Customer Experience data know, many of the outcome questions in this work are so multi-correlated that you’re likely capturing the main effect with any one of the numerous outcome questions you’re asking.
But business wisdom has never come from a single book, article or conference presentation. Business wisdom comes from crafting a decent theory about what is true about your business, and testing to see if you are right.
I certainly can’t imagine Finance decisions being made using the “wisdom of crowds.” If shareholders are important enough to do some diligence with the financials, certainly your customers are worth the same effort.
This is certainly not a slam against the idea of Promoters. It is an admonition that your business is too important to shortcut the process of investigating which Core Customer Metric is the best one — one that is both predictive of business results and easily communicated to the rank and file. What do you think?
Share ThisAre You Sure You’ve Selected the “Right” Core Customer Metric?
During my keynote presentation at IIR’s 2008 Linkage Strategies Conference in Miami, I invited the audience to participate in a sort of informal “survey” regarding successes and failures experienced in connection with putting the Voice of the Customer (VOC) to work.
I asked how many felt their organization had successfully selected and implemented a core measure of customer loyalty, and more than half of the 200 in attendance raised their hands. However, when I asked how many clearly had been able to show how their organization’s loyalty metric is linked to financial or other key business outcomes, only three attendees raised their hands.
In earlier posts at this site, we have tried to argue that an effective Core Customer Metric should provide a valid leading indicator of changes in revenue, market share, customer retention, and other business performance measures. This requires demonstrating the link between the CCM and such business measures. So it seems a little ironic that, while a majority of managers attending the Linkage Strategies 2008 Conference believe they have the “right” Core Customer Metric in place, less than 2% have validated it through linkage to business results.
Yet, this is very similar to what we found in results of the 2007 Maritz Voice of the Customer Challenges survey of managers in Blue Chip companies. The survey found that:
- Seventy (70) percent of the managers we surveyed reported having developed an effective method of “selecting the right customer survey metric for their organization and business.”
- However, only thirty (30) percent of these same managers reported having developed an effective method to demonstrate “the link between customer survey measures and financial and/or other key business results.”
Managers and executives may all agree that they’ve identified the best CCM for their organization because it “makes sense” or because other organizations have found it to be effective. An organization might even be tempted to select a CCM that is “in vogue” in the latest management circles or business publications.
However, at some point, no matter what their stated beliefs or commitments, executives and shareholders will demand evidence of the “bottom-line” impact of customer loyalty. They will want proof that investments in and efforts to measure customer loyalty, for the purpose of making relevant process and quality improvements, actually contribute to growth in revenues, profitability, and other financial and market outcomes. This means that the link between an organization’s Core Customer Metric and key business results must be established.
Has your organization successfully linked its core customer metric to business results? How did you do it?
If not, what barriers are preventing this?
Share ThisCoreCustomerMetric.com Welcomes the AMA!
D. Randall Brandt, PhD, known to us as Randy Brandt, discussed the ins and outs of selecting the RIGHT core customer metric for businesses with the American Marketing Association on Marketing News Radio, March 5, 2008.Listen in to our illustrious Blogger in Chief as he shares a career’s worth of insightful industry knowledge, practical experience and the endgame of knowing what is best to measure. The teaser blurb:
“Conventional managerial wisdom holds that managing customer satisfaction, value, and loyalty makes good business sense because it leads to repeat purchasing, increased share-of-wallet, positive word-of-mouth, and a number of other favorable financial and business outcomes. In fact, faith in these alleged benefits has led many organizations to seek a measure – a Core Customer Metric – that can be used as a barometer of customer affinity, and as a leading indicator of business results. So, what is the best Core Customer Metric for your organization?”
The archived broadcast is Here, or visit Marketing News Radio or www.marketingpower.com and search for Core Customer Metric.
The Law of Diminishing Customer Returns
John Todor (author of “Addicted Customers: How to Get Them Addicted to Your Company”) was discussing an interesting notion — for a given value proposition, for every customer you add, the value of these incremental customers diminishes over time. He quotes author Merlin Stone, author of “The Law of Diminishing Customer Returns,” making the point that most companies do NOT adjust their acquisition or retention strategies for changing market conditions. See the post here.
This seems like a very basic fix but obviously one that has some complexity to it, else most companies would do this.
The problem seems to be two-fold. First, a company must recognize that its customer base (and potential customer base) are comprised of groups of people with very different attitudes and needs (the researchy word for this is “heterogeneity”). The second issue is finding a way to tell whether or not you’re being successful with customers. And, as we like to say here, one size does not fit all — companies need to find the right measure that works for their situation and not try to find a magic bullet.
Share ThisDuh! Unhappy Customers Can Ruin Your Business
Here’s one website/ blog where you don’t want to find out that your Customer Experience has failed: PissedConsumer.com
Yes, there’s a website dedicated to giving unhappy consumers voice. These customers name names, tell their sides of the story and potentially reach thousands of other people. I’m betting that you aren’t going to print this and give it to your corporate affairs person, for fear of causing a heart attack or stroke…
It is an old saw in the business world that a happy customer 
tells one person about their delightful customer experience, while an unhappy customer tells ten. With the increasing use of the internet, particularly Web 2.0, social networking sites, and blogs, do you have much doubt that an determined unhappy customer has the ability to tell way more than ten people about her unhappy experience?
A couple of lessons that must be learned here. First, you should make it EASY for unhappy customers to complain — but complain to you. You want people who’ve had bad experiences to tell YOU about it — not their hundreds of friends on FaceBook. Create or enhance feedback mechanisms at your company to ensure that feedback reaches the ears of someone who can listen, ask questions if necessary and begin the process of making things right. And, by gosh, act on this feedback!
Second, ensure that your company has a robust Voice of the Customer architecture that includes all feasible touchpoints. Don’t just let people send letters to Corporate Affairs (and your CEO) without capturing this feedback and seeing whether your formal customer feedback systems (e.g., customer satisfaction research) jive with what this less formal channels tell you. Is your customer service phone system connected to your sales department? Do your web portal people send feedback to product development? Is your marketing department actively looking for all the places in cyberspace where people might be giving feedback about your company (good and bad)?
Taking the time to build out your Voice of the Customer architecture now will prevent the kind of phone call you will receive from the President of your company when her husband Googles the company and finds a scathing review on a site like PissedConsumer.com.
Share ThisLinking to Business Results: The Holy Grail?
We’re receiving many more requests from clients who are interested in linking aspects of their customer experience research to their business results. Some of these requests are defensive: the marketing research group is trying to justify the customer experience research expenditure by showing how it drives results. Or, management has tied a rather hefty bonus or incentive program to customer results and wants to know how much to put in the pool.Some of these requests are a bit more strategic, along the lines of what aspects of the customer experience needs to be managed closely so that the company can achieve greater results? OK, none of our clients have asked this last question quite this way, but I wish they would.
Despite the repeated death knells for voice of the customer research, there is still no better way to assess your performance BEFORE the customer has taken those next behavioral steps, i.e., the decision to stay or go, to buy again or not.
But so many companies do this type of work for partly the right reasons and often mostly the wrong reasons, and forget that measurement is measurement. Action and change drive improvements.
Companies can’t be blamed for not taking action on their voice of the customer research. Often the research is a stand-alone program, often managed by Sales, Operations or even HR, feeding an employee incentive program, and not tied to any other critical business processes. Or, this program is conducted and reported to the organization without the benefit of planning how the results will be used, who owns the various issues surfaced and what goals need to be set as a result.
One way to overcome some of these problems is to take a hard look at customer experience research programs and ask the following questions:
How will we tie these measures to relevant business results? That is, how will we know what is important to improve in order to improve our bottom line?
Who owns this study, and who should own it? Are the people who have the responsibility for making improvements to what’s being measured heavily involved in the process all the way through?
Is the study method still appropriate for the job? What kind of burden are we placing on our customers to address these issues?
Do we know which processes, procedures or programs are “upstream” from the customer attitudes being measured?
These questions are a mix of internal and externally focused thoughts. The internal establishes the company’s ability to understand and use customer information to improve the business. The external focuses on how we capture that information and what information is captured.
It’s no longer a pipe dream to tie the voice of the customer to business results. New analytical approaches, improved computing power, more robust data capture systems and better thinking regarding linkage all make this task not only more attractive and attainable, but more imperative for companies that want to stay even or ahead of their competition.
What are your thoughts on linkage?
Share ThisCore Customer Metric - Knowing What is Best to Measure
What is your organization’s Core Customer Metric?Is it a customer satisfaction or loyalty index, or something else? A Core Customer Metric (CCM) may be one of your company’s most important performance measures. It is critical to company growth and success in developing and implementing customer strategy.
This website and blog is dedicated to discussion and community around Core Customer Metrics, and knowing what is best to measure.
There has been a huge surge of interest in core customer metrics, indexes and scores and our goal will be to provide balanced experience and knowledge, sort out controversies and discuss how we should be talking about various core customer metrics. You can look forward to valuable information, lively discussions, debates, and surprises. We welcome your thoughts, post comments, participation and feedback.
If your work involves customer relationships, you’ll find value here. Register to become a community member, receive news and give us your thoughts. Pull up a chair, invite your customer-focused colleagues in market research, consumer insights, customer loyalty, marketing communication, brand management, product development, quality, customer service, sales and management to join us, add your comments, and help spread the word.
Core Customer Metric Always, All Ways?
Core Customer Metric…What thoughts, images, ideas or feelings come to mind when you see or hear Core Customer Metric?
What exactly is a Core Customer Metric?
A Core Customer Metric is a key measure of how strongly customers embrace your brand, and how committed they are to continuing to buy from or to do business with you.
Ideally, a Core Customer Metric (CCM) is the most accurate measure of your customer base. A Core Customer Metric should serve as a leading indicator of downstream business results, and also furnish a key measure of overall organizational health and progress. An accurate Core Customer Metric is critical as it should help drive your customer strategy and growth plans.
How does your organization determine it’s Core Customer Metric? Do you think that it is the most accurate measure? Could there be another Core Customer Metric that is a more accurate predictive measure?
Many experts would agree that a Customer Loyalty measure should provide the best Core Customer Metric. But is a one number metric enough? Net Promoter Score (NPS) has recently attracted a lot of attention, and criticism, for its one metric simplicity. NPS is based on asking “The Ultimate Question”, “On a 0-10 sale, How likely is it that you would recommend (Company X) to a friend or colleague?” and then subtracting the % of 0-6 ratings from the % of 9-10 ratings.
Many would argue that while the “would recommend” question is a good question and has been used for years, it may not be the most accurate or predictive measure of customer loyalty based upon your specific market structure, customer type, business goals etc. As an example “share of next ten visits” proved to be more strongly correlated with actual customer loyalty behavior than “would recommend” measures in the study in this article.
Perhaps in some cases customer loyalty might not even be the most appropriate Core Customer Metric for your organization. Customer attitudes, experiences and behaviors must all be considered and new Customer Experience metrics are providing valuable insights.
In your search for your ultimate Core Customer Metric, you might even consider determining your top Core Customer Metrics and build a Core Customer Index, to perhaps then calculate a Core Customer Score.
But it all must start simply in first determing which Core Customer Metric is best for your specific organization and goals. It begins with a best practice approach, like at the end of the article above, to knowing what is best to measure.
Comments?
Share ThisNominate The Best Core Customer Metric
What do you think is The Best Core Customer Metric?“Best” means how strongly customers embrace your brand, and how committed they are to continuing to buy from or to do business with you.
Now is your opportunity to nominate what you think is the Best leading customer indicator of brand affinity and downstream business results. Is it a Customer Satisfaction, Loyalty, Advocacy, Experience, Relationship, Attitude, Behavior or other metric? If you are unsure you may nominate “unknown”.
Nominate the Best Core Customer Metric, receive a Special Results Summary, and help us support core charitable causes.
- Receive a Special Best Core Customer Metrics Final Results Summary for your Nomination.
- For your Nomination, Maritz Research will pledge $2 each to Second Harvest Hunger and the National Alliance to End Homelessness causes toward raising a minimum of $800.
- Please complete the following Best Core Customer Metric Nomination Form below, and then click >>Submit.
- Please nominate once. We will keep all personal nominations private. We will only report summary information and blind examples for CoreCustomerMetric.com readers and site communication.
cforms contact form by delicious:days
Share ThisResearch Spurs Debate Over Net Promoter Score
BtoB Magazine featured a lively article, “Research Spurs Debate Over Net Promoter Score” by Kate Maddox in the Septermber 10, 2007 issue on page 3.The crux of the article was research co-authored by Timothy Keiningham, Bruce Cooil (Vanderbilt University), Tor Wallin Andreassen (Norwegian School of Management), and Lerzan Aksoy (Koc University) appearing in the Journal of Marketing challenging the claim that NPS is the most effective metric linking customer loyalty to growth. Timothy Keiningham states, “Claims of Net Promoter’s superiority in predicting firm growth, or in predicting customer’s future loyalty behaviors are false.”
Gary Slack, Senior Partner at b-to-b agency Slack Barshinger summed things up nicely saying, “We need a respected third party to sort out the controversy and tell us if and how we should be talking about NPS.” Thank you for the nice lead-in Gary. That’s one of the key topics we’ll be discussing next.
While recognizing that NPS is a good metric, D. Randall Brandt, Vice President, Customer Experience & Loyalty of Maritz Research suggests that there are more effective core customer metrics and a core customer metric process in this recent Marketing Management magazine article titled, On the One Number You Need to Grow: One Size Does Not Fit All.
Customer Experience or Customer Satisfaction?
I hear this question posed frequently: “What’s the difference between customer satisfaction and customer experience? Isn’t customer experience just a fancy name for customer satisfaction?”Ask any five industry professionals for their definitions of customer experience and customer loyalty, and likely you’ll get at least ten different definitions. Why the confusion?
The answer is both simple and not simple. The simple answer is customer satisfaction is a component of the customer experience. Specifically, customer satisfaction is one of the desired outcomes of an excellent customer experience.
Most people have heard the business legend of a retail giant’s board meeting. The CMO of 
this mythical company stands up and presents the company’s wonderful customer satisfaction results, trending upward every single period. The beautifully rendered black line of satisfaction results arcs elegantly toward the top right corner of the graph. To applause and congratulations from the board, the CMO sits down. Next, the CFO presents business results. The net of this rather disturbing presentation is that sales and earnings are trending downward, the red line arcing precipitously toward the lower right corner. The Chairman of this mythical Board laces his fingers together and asks for the CMO’s and CFO’s charts to be placed side-by-side. Then this paragon of industry asks: “How can this be?”
If this were an Aesop’s fable, some innocuous animal — perhaps a cow or a dog — would answer that satisfying customers is important, but it doesn’t mean they’ll buy from you again. And the moral of the story would be something along the lines of ” Chasing Customer Satisfaction for its own sake is like chasing your tail. Somewhat gratifying at first, but painful in the end .”
What does this have to do with Customer Experience? Everything. Understanding the drivers of business results and of customer loyalty helps you craft your to-do list for designing a more ideal Customer Experience. One that actually delivers on the things that drive customers to be both satisfied AND want to buy from you again.
And, what happened to the mythical company? They focused on customer experience and customer loyalty instead of simply customer satisfaction. Happy customers, happy employees, happy shareholders.
NPS Discussion Paper Receives Awards
Most people discussing Fred Reichheld’s Net Promoter Score (a popular Core Customer Metric) seem to be either rabidly in favor of it or violently opposed to it. Most of the criticism of the NPS comes from technical perspectives, while most of the adulation for it comes from the upper levels of management.The primary purpose of this blog is to promote discussion of the creation and 
implementation of a Core Customer Metric that adequately reflects the Voice of the Customer and is still predictive of business results. Therefore, it is only fair that we point out the latest Marketing Science Institute/ H. Paul Root Award, which is given each year to the Journal of Marketing paper that had “the most significant contribution to the advancement of the practice of marketing,” is a discussion about the veracity of the Net Promoter Score itself. We like this paper, available here not because it criticizes Reichheld’s much-lambasted NPS Core Customer Metric, but because it promotes a discussion regarding the KINDS of metrics companies should be examining for their own purposes.
As the abstract for this article states, “…Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.” The discussion of these other measures makes interesting reading, since a similar process might and should be performed for any candidate Core Customer Metric.
Share This