MRGA JOURNAL
Throwing Down the Gauntlet
Loyalty ≠ Experience ≠ Satisfaction ≠ Advocacy ≠ Promoter February 2,2011 Howard Lax I’m taking off the gloves and issuing a challenge to practitioners and students in the arena of Customer Loyalty research. I’m not a language “priss”, and I know that outcomes and actions are what matter and always will trump debates about definitional purity. But am I the only one who is tired about the failure of people in our field to distinguish between key concepts – loyalty, experience, satisfaction, advocacy, promoter, etc. – and to treat them as interchangeable synonyms? This is not an academic issue of semantics. It’s about taking aim at business objectives and clarifying what we purportedly are trying to measure and how we go about designing an appropriate research program to hit those objectives. I know this sounds more like geek-speak than applied and practical research, but who (sample audience), what (survey content), when (timing) and why (analysis) all flow from the business objectives and need to be logically related to those objectives. If a bank wants to measure customer loyalty, using surveys of online bill-pay customers triggered by a specific transaction and asking about their most recent experience misses the mark. Perhaps the bank should and does want to examine satisfaction with the bill-pay experience. That’s fine. But that should not be treated as a measure of loyalty. While I know that reasonable people may still disagree, I’d like to put a stake in the ground and start a dialogue and, perhaps, tease out the similarities and differences between what it is we are trying to measure (while always keeping in mind that the measurement is a means to a business objective, not an ends in itself). Loyalty, I would argue, is a relationship concept. It is not an interaction or a transaction. Loyalty is about the stickiness of the relationship with the customer. Loyalty is a mindset, an abstraction, not a behavior. Loyalty is made tangible and expressed through behaviors (or the absence of behaviors). “Loyalty behaviors” are the expressions of loyalty that create value for the company or organization. In general, those behaviors include continued purchases, brand permission (consideration and purchase of related goods and services) and positive word of mouth (WOM). Loyalty is not an experience. Every experience, every customer touch can undermine or strengthen the relationship (loyalty), but it is not the relationship itself. Experiences matter because they are part of the gestalt of the customer relationship. Dissatisfaction with an experience might weaken the glue of the relationship, threatening to dissolve the bonds of loyalty, while exceeding customer expectations can further reinforce those bonds. But loyalty is more than the sum of the customer’s experiences. So at the risk of taking some daggers: you can effectively measure satisfaction with an experience; but asking the “based on your most recent experience with XXX, how likely are you to continue to use/buy again/recommend/what-ever-behavior” types of questions misses the relationship dimension of loyalty behaviors. People no doubt might talk about particular experiences – good, bad or otherwise – but asking people to parse out how they responded to a particular experience separate from the larger relationship usually is misguided.
(Yes, I intentionally hedged to permit for exceptions to which someone no doubt will point, such as once-in-a-lifetime experiences that leave indelible impressions. So if you sell helicopter tours over Grand Canyon, there probably is no relationship beyond “the experience.”) Satisfaction, I would suggest, is both a dimension of loyalty and an overall measure of performance with regards to an experience. There are some who argue that satisfaction has nothing to do with loyalty. I invite these people to post their data sets, as I have never seen an instance in which satisfaction with a company is not highly correlated with any reasonable measure of loyalty to that company. Some people may prefer to use the term “delight” or some other more emotive term than satisfaction; either way, any particular experience can lead to sentiments ranging from elation (i.e., further supporting the relationship) to disappointment (i.e., eroding loyalty). Advocacy – saying or writing good or bad things about a firm and spreading positive or negative word of mouth is, as described above, a loyalty behavior. That is, advocacy is not the same as loyalty; rather, it is a behavioral manifestation of loyalty. The willingness to be an advocate or to recommend often is part of a loyalty construct. In the NPS (Net Promoter Score) world, willingness to recommend is the single measure used to classify people as Promoters, Detractors or Neutrals. The best measures? That is an empirical question: what approach best predicts the customer behavior the firm wants to encourage? The answer may vary based on the company, its value proposition, business model, competition, footprint and other variables. At GfK, we have found that our Loyalty Plusapproach is more predictive of customer behaviors than other models. That said, we also recommend testing and improving on our own approach to best adapt Loyalty Plus to the individual client’s needs. A one-size-fits-all approach guarantees a lowest common denominator that probably doesn’t meet anyone’s needs. We apply the same way of thinking to our Guest Experience Measurement (GEM) work: start with a proven approach, modifying it as appropriate to best meet client needs. Companies need to measure and understand customer loyalty and customer satisfaction with interactions or experiences at key touch points – and they need to understand the role of the customer experience in building customer loyalty. But they should not confuse loyalty, experience, satisfaction or other concepts as one and the same. At best, this reflects sloppy writing and lack of attention to detail. At worst, it indicates a lack of clarity in conceptualization that can totally undermine the validity of research findings and lead to misdirected decisions. I invite you to pick up a glove and share your thoughts.
Volume 1, Issue 1 :: February 2011 MRGA JOURNAL by MRGA Members is licensed under a Creative Commons Attribution 3.0.
44