Predicting the Staying Power of Customers - Interesting White Paper

We at are obsessed with customer service so we found a recent white paper titled Asking the Right Questions: How to Get ROI on Customer Surveys quite interesting. It was authored by the Impact Achievement Group, a training and performance management consulting company.

I think all of us, whether we are marketing/PR agencies or human resource suppliers can learn something from this white paper about how to effectively survey our customers about the job we are doing.

Here are some key points from the white paper. But there is a lot more to it so download it here.

- Once organizations reach a certain size, they obtain a scale that makes it impossible for management to know every customer.

- Without the ability to understand what customers are thinking and feeling, executives typically focus on how much their customers are spending—a number that is easy to measure. The prevailing thought has been, “We must be doing something right—we’re making money and our revenue is increasing.”

- Companies can’t accurately predict the staying power of a customer from merely measuring their buying habits. And by the time the spending of specific customers stop, it is too late to take corrective action.

- Customer satisfaction surveys abound as organizations try to track retention rates but because these practices are so prone to producing inaccurate information (relative to customer “behavior”), many managers—outside the executive level and marketing departments—turn a blind eye on the results.

- Customer loyalty research provides us with some clarity. People who are “loyal” can still harbor ill feelings and behave inappropriately—they just don’t abandon the relationship due to various factors. Likewise, customers may be loyal to a company that they buy from, but: they may not like the company or feel good about buying from them, or they may still spread negative word-of-mouth about their experience.

- It might seem odd that a customer would continue buying from a company they feel negatively about. Not really.Think of all the airline customers who—held hostage by frequent flier programs, route coverage, or company contracts—passionately bad-mouth the carrier at every opportunity. They are “captive customers”, an important consideration when measuring customer attitudes and behaviors. The types of captive customers include those held ransom by long-term contracts, those who can’t afford to switch and those who know only one source for the product or service they need.

-There is one important behavior—beyond buying behavior—that must be uncovered: “Would you recommend the company to someone you cared about or someone whose respect you valued?” and “As a result of your last experience would you make us the first choice for business again in the future?” . These two questions get at the bottom line—an assessment of customer behavior that includes spending behavior and referral behavior.

- Flaws in the present method of measuring customer satisfaction include surveying the wrong customers, no actionable feedback, a disguised marketing initiative, scores don’t equal improved economics, one-size-fits-all solutions can’t meet a company’s unique needs, surveys focus on transactions—not relationships and dissatisfaction as a result of the survey itself.

- In your customer satisfaction surveys, cut to the chase—ask two questions: Does your experience doing business with us (a) earn us repeat business as your first choice? and (b) result in your recommendation of us to family, friends, or business colleagues?

- For your customer satisfaction surveys, choose a scale that works—and stick to it Speak to numerous research firms, and you will hear many different arguments for the best scale to use in any type of customer survey—multiple choice, yes/no, five point, four point, seven point, etc. But the purity of research is not the goal of assessing customer behavior - the goal is a systemic approach to reliable information for making business improvements. Breakthroughs in this area were created at Bain & Company - although, they started out open-minded about the best scale to use, they have found important practical advantages to using a 0 to 10 scale, where 10 means “extremely likely” and 0 means “not at all likely.”

- Conclusion: The key to assessing customer loyalty is administration of the two simple questions listed above. This may seem too simplistic for many but two principles lay the foundation for improving the customer experience. Drilling down to the roots of customer behavior uncovers the real barriers to company growth and positive branding. And the switch to a 0-10 scale for survey questions results is a more accurate measure of real customer opinion and more predictive of their future buying habits and testimonials. These two principles create surveys that produce real, useable data that will help your company build customer loyalty.