Required Reading: Hear Ye, Hear Ye, Tell All About It

For more of the April 2009 edition of CRM magazine, please click here.

The relationship between satisfaction and loyalty may be correlated, but according to the authors of Answering the Ultimate Question—Richard Owen, chief executive officer at Satmetrix, and Laura Brooks, the company’s vice president of research and consulting—the correlation doesn’t imply causation. Solving a problem on a one-off basis may save you from a blogosphere thrashing one day, but the momentary relief doesn’t compare to the security of a devoted (and vocal) consumer. CRM’s Assistant Editor Jessica Tsai spoke with Owen about how a single question could save your company.

CRM magazine: Especially given today’s economy, service is critical. Are companies acknowledging this impetus for change?

Richard Owen: My hope is that, as companies consider the basis on which they’re going to grow over the next decade, we reform our wicked ways. Growth that’s built on sand, whether it’s financial instruments [or] bad profits—we all sort of intuitively knew it would come back to haunt us.

All of a sudden everyone’s interested in [customer satisfaction and retention]. The problem is if you haven’t been interested in this topic for the last three, four years, you’re probably not going to be able to suddenly decide, “Oh, wouldn’t it be nice if our customers liked us?”

CRM: Are these companies beyond repair? If so, how can they benefit from the book?

Owen: Companies that have a strong commitment and good practices already in place will recognize that they have to dial it up and raise their game significantly. There’s always going to be something to learn…and sometimes just reaffirmations are helpful.

For the group that’s suddenly woken up, [this] is a perfect time to read the book because you can put the right emphasis [that will] result in your program being successful. Companies coming from behind have to recognize that it’s going to take them 12 to 18 months to see something favorable. They’re going to have to get very aggressive and very fast-paced.

CRM: How does incorporating Net Promoter into a business differ from other CRM strategies?

Owen: It [disrupts] a comfort level and perhaps even complacency that companies give into because they think customer satisfaction is important. Metrics matter. If you’re…reporting 90 percent customer satisfaction, what you’re internally thinking is, “We’re doing fine.” It’s a shock to learn that that’s more or less irrelevant [now that] your Net Promoter score is much lower because you’re not creating Promoters. You’re not as good as you think you are.

CRM: How does answering the “ultimate question” change customer service?

Owen: Historically, service has been disconnected from marketing in terms of measurement. That’s a mistake. How you measure the effect—from a customer perspective—of your service opportunity is usually a leading indicator of the overall health of your customer loyalty, brand, retention, [and] upsell metrics. We’re trying to solve one of the longest-standing problems in the service organization: Service is an asset to the company and not just a cost.

In a service environment, it’s very hard to measure loyalty. When you resolve a service issue, it’s sometimes strange and inappropriate to ask the question, “On the basis of this service resolution, would you recommend us?” What you have to do is understand to what extent satisfaction in a service environment is linked to loyalty on a brand level. That’s where you make the jump between satisfaction and loyalty.

CRM: It sounds very much like the core of what CRM is all about. How would you tie it together?

Owen: CRM is really about behavioral data—understanding what the firm knows about its customers. Net Promoter is all about attitudinal data—what do the customers know about the firm? We should be interested in both perspectives, looking at them together. The biggest opportunity for CRM over the next decade is figuring out how to connect attitudinal and behavioral data to develop…a [truly] 360-degree perspective.

For more on the Net Promoter score, check out this month's “On the Scene” report.

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BOX:

CRM magazine: You emphasize how the “ultimate question” isn’t just something that can be tossed into a survey. Is this the biggest mistake people make?

Owen: Trivialization is the biggest problem—this sort of Bernie Madoff–style of management: If you think it’s too good to be true, it’s too good to be true. What I find [is that] a lot of conversations go like this:

“Yes, we read about Net Promoter. We love the idea. We’re doing it.”

“What exactly is the ‘it’ you’re doing?”

“We ask the customers, ‘Would you recommend us?’ ”

“That’s a good starting point, but what exactly are you doing that’s going to change the nature of your business?”

And the conversation stops there. Companies are not attacking this as a transformative initiative they have to invest in. These things require human-being changes in the business. The silicon bit we can fix but the carbon bit is tough. You take a very large company with thousands of employees, embedded attitude toward business, culture, processes—[change is] not going to happen easily.

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