Three Critical Issues Facing Loyalty and Customer Satisfaction Research

In these tough economic times, we're seeing many companies revisiting their customer satisfaction and loyalty research programs. And they have three things on their minds.

First, is linking business results and metrics with the research. Second, is actionability of the data. And third, is making these programs more efficient to align more with the new cost structure of an organization. Let's take a closer look at each of these issues.

Linking business results with the research

The loyalty researchers at Ipsos believe that many programs have fallen short based on the fact that loyalty or customer satisfaction has been adopted as a goal unto itself. While we certainly do not argue with the idea that customer loyalty and/or customer satisfaction are important things to consider, if we universally adopt these as good and valuable things to achieve, then, we are losing sight of the big picture and most important, the organization's financial bottom line. The fact is that all customers are NOT created equal and we may very well lose money on a portion of our customer base no matter how satisfied or loyal they are. Think of the supermarket that puts forward a promotional loss leader sale and a certain number of loyal customers go there all the time constantly, but these customers only buy the products where the supermarket is losing money. The banking industry is currently facing a similar situation where a number of their most loyal customers are causing huge write downs. These customers may be loyal, but they are clearly not profitable.

Action orientation of the program

Many programs fall short because they simply do not have "buy in" at the organizational level. A loyalty program is run, data is collected, and results are reported, but yet no real action and no organizational change occur. Data sits on the proverbial shelf, gathering dust. One of the things companies try to do to align business processes with their loyalty programs is to align employee compensation with the loyalty metrics. The challenge is that company employees are often compensated on things they cannot control. Think of the retail category, specifically, at the store level of an organization. If we compensate store managers and line employees on Net Promoter or satisfaction or any single number, we have a big issue, because the primary drivers of these metrics will be things that are outside of the control of the line worker (e.g. store location and/or merchandising). Better to parse out the metrics according to category drivers and empower people to impact the metrics on which they are being paid.

Cost reduction

People are revisiting their programs to simply reduce costs. And why shouldn't they. Many of these programs are bloated and the efficiencies of new technologies are not being fully utilized. A simple re-examination of technology and overall process and methodology can lead to five, six, even seven figure savings. For example, leveraging the same platform for CATI (computer-assisted telephone interviewing) and web based interviews, or having servers in local markets to avoid long distance toll costs. These-in addition to an audit of sample frames, questionnaire design, and better defining exact reporting needs--can yield a significantly lower cost structure.

The Solution is Yours

There are a variety of ways that organizations and marketing departments have been dealing with these three issues. For linkages, a lot has to do with category specific models that are vetted and optimized for the specific environment. For actionability, the answer has more to do with change management capabilities and communication planning and processes. And when revisiting cost structures, an open mind and a well versed partner is generally a good place to start. With that said, the answers to these issues are often complex and a detailed program audit will yield `best in class' solutions that pertain to your particular environment.