Customer%20Commitment%20and%20Advocacy:%20Beyond%20Satisfaction,%20Beyond%20Loyalty,%20to%20Customers%20for%20Life

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Customer Commitment and Advocacy Beyond
Satisfaction, Beyond Loyalty, to Customers for
Life

• Michael Lowenstein, CPCM
• Managing Director
• Customer Retention Associates

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Differences Between Customer Satisfaction,
Loyalty and Advocacy

• Satisfaction Tends to be passive and reactive,
  addresses attitudes and most recent transactions
• Loyalty More proactive and anticipatory,
  addresses strategic impact on behavior
  (frequency, cross-sell, referral, future
  purchase)
• Advocacy Combines attitudes and behaviors
  (voluntary information provision, etc.),
  addresses processes, culture, equity, stakeholder
  impact

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Life Cycle Big Three Acquisition, Retention,
Win-Back

• Objective Loyal, Committed Customers
• Regular/repeat purchases
• Purchase across product/service lines
• Provide information
• Refer others
• Immune to pull of competition
• Can withstand occasional performance lapses
• Supported by loyal, committed employees and
  customer-focused processes

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Value is About Much More Than Money

• Value Customer - perceived tangible and
  intangible benefits supplied solutions provided
  - what is required to obtain benefits and
  solutions
• The Kano Model - Managing Experiences
• Expected - Failure will result in potential
  defection
• One-Dimensional - Desired, standards of
  competitors
• Attractive/Surprising - Positive and unanticipated

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Customer value and insight is (almost) all about
the data
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Viral Marketing Challenges

• Continuation of spam problem online
• Data privacy issues Patriot Act and European
  Union laws
• Respect of individual customer data by suppliers
• Over-focus on customer acquisition

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Seven Customer Life Stages

• Suspect
• Prospect (Active/Developmental)
• Customer (New/Recovered)
• Retained/Loyal Customer
• At-Risk Customer (Attrition)
• Defected/Lost Customer
• Recovered/Won-Back Customer
  

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Target Prospects With Strong Advocacy and
Commitment Potential
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Most Companies Overemphasize Acquisition

• Studies show that 80 of companies spend too much
  of marketing budget on customer acquisition
  (Acquirers)
• - About 10 spend too much on retention
• (Retainers)
• - About 10 are Profit Maximizers, balance
• between acquisition and retention
• Source Prof. Adrian Payne, Cranfield
  University, U.K.

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Why Does This Happen?

• - Belief that existing customers will be
  retained company needs to focus on acquisition
• - High churn rate/leaky bucket
• - Customer acquisition reported regularly to
  analysts/share holders/senior management churn
  may/may not be reported
• - Lifetime value profit impact of lost customers
  not reviewed
• - Sales force/senior management compensation
  based on acquisition, not retention

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Avoiding the Casanova Complex

• Causes
• Compensating salespeople, and other staff, based
  on new customers brought into the company
• Promotional programs for attracting new
  product/service triers
• Avoidance
• Carefully audit sales and promotional programs
• Track loyalty and advocacy of customers recruited
  through sales and promotional offers

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Attract the Best Prospects

• The right customers are
• Within a defined niche, around which the business
  model is built
• Within clients and industries that match your
  firms vision and expertise
• The most profitable
• Prospects for repeat/cross-sold business
• Those that need your capabilities and will let
  you do your job

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Also..

• They need less direct incentive to purchase
• They are more resistant than others to
  competitive claims and attempts to lure them away
• They are less price sensitive
• They are more accepting of occasional value
  delivery lapses
• They are more positive about their brand

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Acquiring, Managing and Applying Divisible
Customer Data

• Trustworthiness, accuracy of data sources/quality
  of data
• Parsing and standardizing
• Matching/deduplication
• Real-time data availability for users
• Creation and application of data tools, such as
  predictive models

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Raw Data
Stored Data
 
               

Single View(s)
Insight
Action
Optimize
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Customer Data Integration

• An essential tool brings together all data
  streams and individual customer databases, inside
  and outside of company, in one place to create a
  single customer perspective
• Enables supplier staff to have all available data
  at each customer contact point, avoiding blind
  spots
• Use of linking technology to blend clean, rich
  external data with internal customer data to
  create knowledge base

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Getting the Right Customer Data Huba
McConnells Top Ten

• Believe that customers possess good ideas
• Gather customer feedback at every opportunity
• Focus on continual improvement
• Actively solicit good and bad feedback
• Dont spend vast sums of money doing it
• Seek real-time feedback
• Make it easy for customers to provide feedback
• Leverage technology to aid your efforts
• Share customer feedback across the organization
• Use feedback to make changes quickly

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Applying Data for Advocacy

• Right customer
• Right message
• Right media
• Right time/situation
• Right follow-up information/response
• Right purchase or service experience

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Targeting Messages/Managing Experiences

• What clicks with with customers, what doesnt
• Be mindful of the customer life cycle every
  component is important
• How committed and involved are your customers?

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Clicking With Customers

• Creating brand chemistry combining messaging
  and experience
• Building two-way dialogue, and deepening trust
• Selecting the right media on macro and micro
  levels

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The Case for Personalization and Permissioning

• Microsegmentation and individualized,
  situation-based messaging now possible
• Opt-in/double opt-in online requirements
• Quris One-third of customers who subscribed to
  permission-based programs had remained 3 years
  two-thirds had purchased something

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Negatives of Fuzzy, Tactical Value Propositions

• Inconsistency, confusion and switching little
  advocacy created
• Similarity of benefits and messaging
• Addresses customers experience to experience,
  fire drill fashion
• Difficulty of morphing messages to experiences

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Customer Engagement and Involvement

• Loyalty/advocacy driven by what customers value
  in relationship and experiences over time
• Current customer situation
• - Only 40 45 of customers consider
  themselves loyal
• - Most using supplier out of habit
• - About 10 - 15 at high risk for churn
• Overuse of loyalty programs as surrogate
  forcreating perceived value
• - Some effect, but 40 have never redeemed
  points

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Understanding Dynamics of How Customers Make
Supplier Choices

• Is there a mutually beneficial relationship and
  can value be demonstrated?
• How invested are customers in product or
  service?
• What types of alternatives exist, and how are
  they perceived?
• Do alternatives possess positive, strategic
  differentiation?

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Next Generation Approaches for Understanding
Decision Dynamics

• Keying on non-verbal communication (touch,
  gestures, posture, etc.) where up to 80 of
  message conveyance exists
• Much of customer thinking occurs in unconscious
  mind, using non-linear images
• Getting to the why of preference means using
  methods such as metaphor elicitation to uncover
  psychological and emotional factors

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Getting to Commitment and Advocacy

• Its about
• Customer attitude and emotional attachment toward
  a supplier also, how others feel about supplier
• Level of preference and conviction for
  product/service
• Consistency of delivery effectiveness of
  processes
• Aligning of customers values with those of
  supplier
• Perceived positive differentiation from
  alternatives
• How well supplier can persuade, influence, and
  leverage customer thinking and behavior over
  long-term

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Data Importance of Clubs, Loyalty Programs,
Communities

• Using voluntarily contributed data to create
  relevance
• Ability to focus on, and gather information from,
  best and emerging customers
• On-line communities as data engines eBay,
  Amazon,
• Harley-Davidson, Classmates, eBags, Harry
  Potter
• - Lower customer service costs
• - Product/concept beta testing
• - Customer value research (Hallmarks
  Idea Exchange)
• Companies of any size, or industry, can use
  techniques to generate higher advocacy levels
  among customers

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Where, and How, Customer Service Fits in the Mix

• Creating perceived, individualized value for
  customers, online and offline
• Moving through customer service stages to
  achieve divisibility and advocacy
• - Rudimentary Answering phones manually
  responding to e- mails
• - Responsive More communication channels
  and automated contact processes customer
  contact history/information database
• - Proactive Service monitors and captures
  information across all channels personalized e-
  mail messaging
• - Top Line Service is profit center
  cross-sell, upsell, renewal and recovery use of
  individual customer detail for recommendations

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(Not) Back to The Future

• Critical disconnect between suppliers, customers,
  and customers experiences
• Understanding the leveraging relationship between
  employee commitment and customer advocacy
• Making customer divisibility a reality
• - Price Automotive Group
• - Tesco
• - Harrahs
• Opportunities to create customer advocacy

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The Customer Advocacy ChallengeSustaining the
Commitment-Based Focus

• There is nothing permanent except change.
• 
  Heraclitus