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Measuring customer loyalty

This section of the customer loyalty guide will provide tips on measuring customer loyalty and evaluating loyalty efforts in the call center and with technology tools.

Table of contents:
Understanding customer loyalty
How to build customer loyalty
Measuring customer loyalty
Customer loyalty case studies and industry-specific strategies
Customer retention: Long-term strategy
More CRM and call center learning tools



  Measuring customer loyalty  

As technology matures, businesses are better able to gauge how happy their customers are, and how likely they are to return. Call center agents and software tools play a part in measuring customer loyalty and retention.

Customer loyalty and customer experiences in the call center
A focus on the customer experience over the past year is probably the cause of a significant drop in customer satisfaction levels in the contact center, according to a report issued in March of 2007. The Global Contact Center Benchmarking report found that customer satisfaction levels dropped from 82% last year to 68%. However, that might be a good thing, according to Cara Diemont, editor of the report. "We think it's not so much because customers are not happy, but because contact centers are doing a better job of measuring satisfaction," she said. Other concerns include a drop in first call resolution (FCR) and more centers moving to IP technology. Staffing continues to claim the lion's share of operational budgets, ranging from a low of 64% in Africa and Asia to a high of 74% in North America. When it comes to call center metrics, the more strategic types of metrics are not being used, Diemont said. Given the financial metrics, the one measured most is cost per customer per channel, but only 42% say they can measure that, according to the report.

Here's a new line of thinking in call center quality management: stop measuring it internally, and go straight to customers for their evaluation of agent performance. After all, customers are closest to the call experience, have an opinion unbiased by their experience as a company employee or their own interpretation of corporate goals, and are the only evaluators who know the true purpose of the call. The rapid-response customer satisfaction surveys also help call center managers recognize trends and spikes in customer experience faster, enabling quick action when trouble emerges.

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Software for measuring customer loyalty
CRM software vendor CDC Software Corp. bought Respond Group Ltd., a European provider of customer feedback software, in February of 2007. U.K.-based Respond serves 800 customers, primarily in the financial services industry, including AXA Insurance and Barclays. Respond will provide opportunities to cross-sell and upsell CDC's Pivotal CRM application to its existing financial services customer base. The acquisition is a way for CDC to build out its industry-specific capabilities with its more than 5,000 customers. The acquisition will also bring customer surveying tools to the Pivotal product, an emerging CRM trend.

According to columnist Donna Fluss, the best way to determine if customers are satisfied with a company, its products and its services is to ask them. "Customer surveys should be a priority for all enterprises. It's an important indicator of whether customers will remain loyal and recommend a company and its products/services to others. An unused customer satisfaction survey can do more harm than good.

"If a company conducts a customer satisfaction survey, but finds the data useless and does nothing with the results, the impact on customers is worse than if the survey never took place. When an organization reaches out to its customers and asks their opinion, the expectation is that the results are going to matter and the company is going to respond appropriately. If no action follows a customer survey, the company subtly communicates that customer opinion is not important. Clearly, this isn't a desirable message."

When examining the results of a customer loyalty program, there's more to measuring its success than ROI alone. Instead of focusing on the return-on-investment equation, which is the standard "revenue minus investment expenses equals return," Will Wittkopf, a consultant with Carlson Marketing Worldwide's Decision Sciences group, recommends a focus on two elements of the equation: causality and incrementality. Wittkopf defines causality as the ability to trace a clear link from a program initiative (such as an email marketing customer acquisition campaign) to an observed outcome or result (new members acquired, increase in intent-to-purchase score). Incrementality is the ability to know whether a program initiative is delivering the right outcomes. For a customer loyalty program to show real results, it must show that the results being measured are incrementally better than those generated without the program.

CRM may have taught that retaining an existing customer can be more cost-effective than acquiring a new customer, but making that happen is no easy task. And when it comes to customer loyalty marketing, even some of the most successful companies face challenges. At the Gartner CRM Summit in 2006, marketers from Visa, Royal Caribbean, AARP and BellSouth shared their experiences in building customer loyalty and increasing customer retention. Companies are now focused on improving loyalty through the customer experience. The process pays off. Knowing your customers can mean more effective pricing, a better targeted mix of products, smarter revenue management and better marketing spend. It's been a challenge getting programs started for these companies, however. AARP is also moving from a customer reward system -- for example, receiving points or a product when a member goes to a cholesterol screening -- to being able to use those rewards to put into savings, donate to charity, or receive the gift.

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