September 7, 2009
By Jeffrey Henning, founder, Vovici

Looking for Loyalty?

Customer experience management (CEM) is the latest buzzword to buzz saw its way through the thicket of customer-focused acronyms. The term is newly important: In a recent survey we conducted of 200 professionals, 63 percent said that CEM was very important to their organizations in 2009, up from 47 percent in 2008.

As important as it is to manage customer experiences, it is a means to an end building customer loyalty. This goes beyond just getting customers to recommend the company to others, but reaches into influencing other existing customers to:

resist switching to other suppliers;
purchase again; and
increase the amount and frequency at which they purchase.

How and where does CRM fit into CEM and customer loyalty? We identified 24 best practices that organizations should consider, which is far too many for a firm to adopt all at once. To help organizations prioritize, we asked respondents to rate their organization's performance in each of the best practices and to assess the loyalty of their customers across four dimensions. We then identified the practices that had a strong positive correlation to loyalty.

Not surprisingly, the practice with the highest correlation to customer loyalty was having a formal customer experience strategy in place. If your organization does not develop a top-down, strategic focus on improving the customer experience, all the bottom-up, in-the-trenches initiatives taken by your employees will not be enough to acquire new ground.

So, as organizations think about developing a formal customer experience program, what is the most important initiative they should undertake?

To our surprise, the best practice with the second highest correlation to loyalty was integrating data from an organization's CRM system into its customer-feedback surveys, which is only a recent practice. When I started in the market research industry in the 1980s, surveys often began by asking respondents how long they had been a customer, what products they used, and so forth. With CRM systems not yet invented, however, there was no other way to get this information than through surveys. Today, this approach persists because it is easy and has become a habit for many survey researchers.

If it's a bad habit, it's a pervasive habit. In fact, according to our survey, only 7.7 percent of respondents strongly agreed that they were integrating data from their CRM into customer feedback practices. But the few companies that did so were more likely to have very loyal customers. It's not hard to imagine why: Asking a customer questions that suggest that companies don't know who the customers are, what they buy, and when they've called creates an impression of distance and makes it seem like the organization doesn't value them.

Now contrast that with a customer's experience with a survey that incorporates extensive information about the customer:

The questionnaire will be shorter. Not only is this more respectful of the customer's time, but it means you will have a greater response rate and a lower abandonment rate. That will lead to data with greater statistical validity.

Information will be more accurate. Pulling past information from your CRM system is more reliable than forcing customers to recall historical details. Consumers are unlikely to remember the year they first started doing business with most organizations, but the CRM system will have that knowledge.

Surveys will have more targeted and relevant questions. For instance, "According to our records, you do not have an active service plan for our widget. What are the reasons you've decided a service plan isn't right for you at this time?"

Rich analyses of the survey data can be conducted. By cross-tabulating the results and segmenting customers based on CRM data, companies can gain deeper insight with analytics. Domino's Pizza asks a simple five-question survey (http://blog.vovici.com/dominos) after each online order, but it integrates CRM data to analyze that across at least nine different additional dimensions by factors such as:

geography;
delivery person;
cook;
type of pizza ordered;
time of the order; and
success or failure of the upsell offer.

According to our survey, CRM plays a vital role in delivering on the promise of CEM. Companies that are abuzz with the prospect of improving customer experiences should champion the importance of the CRM system to that CEM initiative.

About the Author
Jeffrey Henning (jhenning@vovici.com) is a founder of Vovici, the pioneer of enterprise feedback management and a provider of voice of the customer software solutions and services. He began his career as a market researcher and industry analyst with BIS Strategic Decisions (now part of Forrester Research). He is the author of the ebooks Survey Software Success and The Customer Satisfaction Survey: Measuring the Customer Experience to Build Customer Loyalty. He blogs regularly about customer experience issues at http://blog.vovici.com/.

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For the rest of the September 2009 issue of CRM magazine please click here.