A long-time friend and client (and great customer advocate) recently sent an article to me titled “Linking Customer Loyalty to Growth”. It was published in the Summer 2008 issue of the MIT Sloan Management Review, and authored by Timothy Keiningham, Lerzan Aksoy, Bruce Cooil and Tor Wallin Andreassen. The first listed author, Tim Keiningham, I am very familiar with as he is a well-regarded expert in our field and has academic credentials in his background as well. The other three are all full time management professors from Fordham, Vanderbilt and the Norweigan School of Management in Oslo, and while I am not familiar with their work, their affiliations seem to validate their expertise.
On the surface, and as the title suggests, the authors are comparing the relative merits of different ways to link loyalty to business performance. This is a worthwhile effort and one of the most exciting developments in our profession over the last decade. While most of us always believed that we could predict future customer behavior by taking attitudinal and intentional measures, the actual validation we have seen working with our clients and published in works such as this article continue to reinforce that focusing on the customer is a good way to run your business better.
In the article, Keiningham and his colleagues explore a few of the more common methods of linking customer metrics to business success and end up specifically refuting some of the claims made by Fred Reichheld, the inventor of the Net Promoter Score or NPS. This has been a common subject of Keiningham and while I have tried hard to stay “above the fray” on the whole NPS debate, Keiningham and crew provide a pretty compelling argument and support it with good analysis. Maybe someday, I’ll get in on the NPS discussion—but that is not the thing that had the most impact on me as I read the article.
If there is one thing I enjoy studying more than customer behavior—it is history—even the history of our measurement. In this article, the authors give a great discussion on the evolution of measurement of customer satisfaction and loyalty. I discussed it with my good friend and colleague Sonya McAllister and we shared how over our careers we have seen so many approaches come and go and how over the years we have worked with clients who at one time or another used TQM, SERVQUAL, CVA, and now NPS.
While the names and techniques seem to come and go, one thing that definitely does endure, and no matter what you decide to call it, companies need to develop and continuously improve their methods and ways of measuring their customer relationships. The more complicated the business—especially B to B—the more essential it is to have a system—so that you can discuss the customer in terms of “facts” that people can agree on and can commit to improving.
To read the complete article click on the link below. Ordinarily, one would have to subscribe but this article is offered free, apparently, compliments of IBM—so Thank You, Big Blue!
This post was originally published November 14, 2008 in Customer Connection.