What is loyalty without choice?

This article is in response to a question I received from a reader about what her company should be doing to measure/manage loyalty under conditions of being a monopoly. The specific business is to provide training programs for employees of other organizations.

Some of the very first survey-based customer satisfaction measurement (CSM) programs were developed in response to regulators requiring monopolies such as telephone and energy companies to provide evidence that their customers were happy with their services (often during rate change applications). For the most part, a simple overall satisfaction question was the primary measure.

As CSM programs evolved to measure customer loyalty/commitment, it made sense to ask what a monopoly should measure when "loyalty" isn't voluntary.

Here are some measures that work.

Advocacy

This is similar to thinking about a person who is willing to recommend a supplier to someone else but in this case it is not about recommendation so much as it is about thinking the continuance of the monopoly is desirable. Here in Ontario, we have a provincial liquor control board (LCBO) that operates retail liquor stores across the province and in a near monopoly situation. This has been an extremely effective (and profitable) business. Every so often the provincial government lets it be known that they might consider selling-off the LCBO which sparks some debate as to whether or not this would be in the best interests of consumers.

While I can't lay claim to knowing how many Ontarians take a "for or against" position on this matter, the fact that there are people against privatization is ample demonstration that there are people who want to see the monopoly maintained and they advocate so.

Therefore, one way to measure attitudinal "loyalty" or commitment if you wish is to determine whether or not people have a desire to see the monopoly continue vs. a desire for competition (even if competition is not actually likely to come about in any near term).

But I would caution here that advocacy the way I intend it does not mean asking whether or not someone would recommend the provider to others. That isn't the issue since "recommendation" matters little when there is actually no choice.

Finally, we might also consider under some circumstances a question that is related to "recommendation". In the case of this training organization a viable question for their students is whether or not they would recommend to their manager/supervisor that others take the course(s) or some other form of what they would tell their companies about the training organization and their instructors.

Value

If advocacy isn't enough then we might consider "value" as another measure that would work. Value is simple the consumer's opinion of the quality of the product or service received vs. what they had to pay for that service (and in some instances you might also want to consider non-monetary costs such as effort required/hassle-factor etc. associated with obtaining or using the product/service.

Value can also be used by some monopolies for benchmarking purposes. The reader who asked me about monopolies said they are the sole provider for a specific type of training that their clients must have. So they are a monopoly for that training but it is highly likely that their client organizations also send employees to other types of training. Relative measures such as value (and quality as indicated below) can be used. Regardless of the subject matter involved, the training provided should provide a high level of value based on the quality of training received for the cost of that training.

Quality/Satisfaction

Asking people to tell you whether or not your products/services are good are also viable measures for a monopoly. It doesn't matter if a company is a monopoly or not. Customers should expect and receive a high quality of product/service. Your staff should be well trained and should be working hard to provide customers with a positive experience. Your products ought to be of a high quality. Customers, even when there is no direct point of reference or competing product/service, can rate how good your product/service is on an absolute basis without any problems.

Many monopolies can easily benchmark themselves even though they have no competitor for their specific product/service. My reader's organization provides training and presumably, there could be facilities (which could be compared to other training facilities), there are resource materials that might be compared and of course instructors might be rated in comparison to others.

Outcomes

In customer loyalty/satisfaction research, we often measure outcomes such as a willingness to re-purchase a product or a service. For some, such as this training organization, a successful outcome might be judged by the customer-organization who acknowledges their employees are now trained/qualified and of course the employees themselves can provide a rating for whether or not they feel trained/qualified.

We could also ask whether or not a person would like to (or is looking forward to) dealing with the company/organization again in the future.

The important thing is to measure and react

Monopolies and even some oligopolies have not always had the best image or reputation but it doesn't have to be that way. The organizations should be demanding a high level of service from their staff and their customers should certainly expect a level of product and service that is the equivalent of a private sector company.

All monopoly organizations should seek feedback and react to the findings to improve their products and services.

Your Take Away for Today

Monopolies are not really different in what they should measure except that trying to determine which customers are "loyal" or "at risk" is not about their future behaviour but more about their "attitudinal" loyalty (are they happy advocates?).

1. Determine what measures make sense for your product service.
2. Determine what parts, if any, of your products or services can be benchmarked in a meaningful way to other private sector organizations that provide something similar (for example call centres, administrative procedures like invoicing, staff performance etc.).
3. Take the same actions with your results that you would take if you were in a competitive market.
4. Do all of the above because customers simply deserve that level of performance and respect.

Please remember that I'd like to make your marketing questions and challenges the basis for future articles. If you are facing challenges understanding loyalty and switching behaviors, send me a note describing the situation. While it will help to know specifics, the article itself does not have to mention you, your company/brand or even your market as there are almost always going to be other markets and categories that are similar.