CUSTOMER LOYALTY -Do Customers Like You? Depends on How You Ask

CIO —

A recent survey by the Customer Respect Group found that only six of the 100 largest U.S. companies deliver an excellent online experience to consumers. One of the goals of this and many other surveys, whether conducted by third parties or in-house, is to pinpoint what creates repeat business. However customer satisfaction is measured, the value of the results depends on asking the right questions.

In this regard, third-party surveys have two advantages over in-house studies, says James Chung, president of the Reach Advisors consultancy. First, they avoid the internal biases that lead many companies to ask about the quality of their customer service, marketing and billing rather than about "how the customer buys." Second, independent researchers can establish industry benchmarks, enabling companies to compare themselves with competitors. Nevertheless, satisfaction isn’t the golden metric most businesses assume it is, Chung says: There’s a low correlation between satisfaction and purchasing behavior.

Marketing consultant Bruce Kasanoff claims there’s only one meaningful question to ask customers: "How likely is it that you will recommend us to a friend or colleague?" The answers, ranked on a 1-to-10 "likeliness scale," are all a company needs to know, he says. Customers who answer 9 or 10 are loyal promoters of your company; those who answer 6 or less are detractors. The remainder Kasanoff terms "passively satisfied." Segmenting all these customers by their business value and following up with them accordingly will help you repair your loyalty problem, he says.

But don’t dare rest on your laurels, says Terry Golesworthy, president of the Customer Respect Group. "The surveys that tell you that you are doing things absolutely perfectly are the ones you should be concerned about." They’re a sign that you haven’t asked the right questions yet.