Customer loyalty, not customer satisfaction, is key to the success of an organization, and customer loyalty is fostered when an organization excels along two dimensions:
Design of its Products - including its Service Products
Operational Execution - or Conformance - to the Design
Many companies focus on rewarding customers who have repeat purchases. Such reward programs have their place in assuring customer loyalty. However, if the product or service doesn't meet customer needs, no reward program will keep them returning. For success in the long run, an organization must:
Quickly identify and resolve problems to the customer's satisfaction -- or more
Learning is the root of continuously improving design and execution, and the life blood of learning is feedback. Strong, effective customer feedback loops do not just happen. Structured, comprehensive research programs are necessary to provide the data upon which to develop projects and initiatives to improve customer loyalty.
The first step in customer loyalty research programs is formulating the objectives. Next, the current state of customer loyalty needs to be documented. That is, what is the satisfaction level and the defection rate? Depending on the state of the company's data bases, the latter figure may be difficult to ascertain.
Then, data collection projects, such as survey questionnaires and other research tools, must be developed. The goal in these tools is to find out customers' satisfaction level and how many customers are defecting. Follow-on detailed research should help determine why customers are defecting. Once the feedback is captured and analyzed, the findings must be communicated to the root source where improvement is needed. The result: better products and processes that foster customer loyalty and long run profitability.
Many companies conduct a customer satisfaction survey, place a check mark on their "to do" list, and go on about normal business. While periodic in-depth research helps to identify needed changes in service product design, continuous listening to customers' perceptions about completed service transactions allows a service organization to keep a vigilant eye on service quality. By applying Statistical Process Control techniques to transaction-based survey data, root cause analysis can identify areas needing improvement or successful aspects of the service operation to strengthen.
This survey research is the heart of a customer loyalty program, complemented by 1) occasional focused interviews to unearth the contextual data about process shortcomings, 2) complaint solicitation and 3) a robust service recovery program. With this base, then a rewards program can be designed that targets customers.
The key challenge in developing an effective rewards program is researching the key elements that will drive loyalty. Many companies assume that gifts will drive return purchases. That might prove to be a bad assumption. In a recent project, we were tasked with identifying the components of a rewards program for an educational service division of a major technology company. Contrary to the expectations of the research sponsors, t-shirts and even PDAs were not seen as meaningful. Instead, the research group, which was comprised of both current and prospective customers, found greater value in content-rich rewards, items that were not readily available that supplemented the educational service they were purchasing.
How did we find this out? We applied a multi-stage research approach. First, we conducted a series of focus groups to understand the field of inquiry better. Armed with this understanding, we then performed a conjoint analysis, which is extremely valuable in fleshing out the underlying value that people find in a range of options. This fact-based approach allowed the development of a rewards program that generated value in the eyes of the target customers.
As research professionals, Great Brook knows how to develop sound, valid research approaches to measuring customer loyalty and the development of rewards programs to secure that loyalty. Our skill ensures that the information generated has genuine business meaning.
Please contact us to see how we can help you.
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