Saturday, March 07, 2009

Customer Experience Leads To Loyalty

Customer's loyalty facing the zapping generation
Customer relationship management (CRM) programs are facing big issues as they are struggling in maintaining customers' loyalty. We are in the zapping generation: customers are used to zap brands and products as they would change channels on TV. They don't have the same concept of loyalty as our parents used to. They are driven by the instantaneous interest, and therefore, it is difficult to create brand loyalty

Customer experience as a key to create loyalty
Bruce Temkin
of Forrester published a report called Customer Experience Correlates To Loyalty. Here is the description:

"I just published a report called Customer Experience Correlates To Loyalty that examines the connection between customer experience and three components of loyalty:

  • Reluctance to switch business from a company
  • Willingness to buy another product from a company
  • Likelihood to recommend a company to a friend or colleague

The analysis is based on a survey of nearly 4,700 US consumers in October 2008. The results are compelling. Across all 12 industries we examined, there was at least a medium level of correlation between customer experience and loyalty; in most cases the correlation was much higher.

This chart shows the level of correlation between customer experience (as defined by Forrester’s 2008 Customer Experience Index) and the three elements of loyalty:


I also did the same analysis with consumer data from Q3 2007 on nine of these industries (we added airlines, hotels, and PC manufacturers this year). It turns out that the correlation between customer experience and loyalty has increased in every industry.

I wasn’t surprised to find the link between customer experience and loyalty; I’ve worked with — and studied — enough firms to know that there’s a strong correlation. But I wasn’t sure how the economic downturn had altered this relationship. So it was very interesting to find out that the connection has become stronger in the recession.

The bottom line: Don’t neglect customer experience during the downturn."

My opinion

Customer experience is probably one of the most important of the component of brand loyalty. I actually believe that customer relationship programs and reward strategies should also focus on how you could improve customer experience of your A clients.