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A McKinsey report suggests that, most companies lose between 10-40% of their customers each year. Ouch! An average company has a 20-40 percent chance of reclaiming a lost customer versus a 5-20% chance of acquiring a new customer. Other research suggests that a 2% increase in customer loyalty has the same bottom-line effect as reducing operating costs by 10%. Loyalty is a behavior.

Customer behavior is really all that counts. Therefore we needs ways to measure customer behavior. The value of establishing and tracking customer loyalty and engagement is that they provide some effective leading indicators into how your customers are going to behave. A survey by SAS and Peppers & Rogers Group polled 150 senior executives from leading US corporations to gauge their customer experience management capabilities. The results, published in the first annual Customer Experience Maturity Monitor study, found that only 39% of the study’s companies rated their capabilities as ‘good’ or ‘excellent’ in predicting a customer’s likelihood to purchase, cancel or defect.

The study found those companies that have better customer experience management capabilities enjoy a distinct competitive advantage and outperform their competition.  The survey also noted that customer-centricity is growing as a key strategic concept and that companies are beginning to incorporate customer metrics as key performance indicators.

Create Customer-Centric Metrics to Develop Growth Strategies and Manage Risk

Create Customer-Centric Metrics to Develop Growth Strategies and Manage Risk

Three Customer Behavior Metrics for Your Marketing Dashboard

There are three customer behavior metrics we recommend you include in your marketing executive dashboard: customer trust, customer loyalty, and customer engagement.

  1. Customer Trust –  A CMO Council study found that some 99% of customers surveyed said they would either scale back or terminate relationships with supplier who fail to build customer trust. The Oxford Dictionary defines trust as “a firm belief in reliability, honesty, veracity, justice, strength of a person or thing; reliance on truth of statements without examination; confident expectation; accept without evidence.”

Trust implies an absolute and assured resting on something or someone.  How do you create trust?  Results from the annual Edelman Trust Barometer, which surveys nearly 2,000 opinion leaders in 11 countries found that the most important factor in building trust is “Quality products and services.” In addition, trust is built through frequent interactions. These interactions are your opportunity to build trust. Examine how your are measuring customer trust. If it’s been awhile or you haven’t taken the time yet to map all your customer touch points, the frequency of interaction per touch point, and the trust established at each interaction, it’s time to do so. 

2.  Customer Loyalty – Behavior is more important than attitude. Customers show their loyalty by the direction of the feet. Every company should have data associated with these questions as part of understanding the degree of customer loyalty and the potential level of customer risk:

  • Are your customers staying or defecting? Which ones?
  • Are your customers serving as advocates for your company? Which ones and how many?
  • Do your customers proactively endorse your company, its products and services? Which customers?

It it essential that you identify customer behaviors that impact customer loyalty and risk and regularly measure and monitor these. 

3. Customer Engagement – Engagement should be defined by customer response. You will want to measure both a customer’s rational assessment of a brand as well as their emotional attachment. In addition to exploring insights from data related to how a customer is to continue to choose/repurchase your brand and how likely they are to recommend your brand to a friend/associate, capture data  related to confidence, pride and passion to determine the emotional attachment.

Engaging your customers in your business creates a strong base of loyal customers.  Loyalty isn’t something that is bought. Here are four ideas to begin the process of engaging your customers that  won’t take a big bite out of your budget:

  • Involve Customers. This can be as simple as involving them in product reviews or more complex such as implementing a customer advisory board.  At a minimum, have a process that encourages and enables customers to create and submit lists for product requirements.
  • Ask for Input: Focus groups and surveys are nice and when done well can provide objective insight. These shouldn’t preclude asking customers for feedback. Create a method for customers to give you ongoing feedback regarding products, services, support, and business processes. Be sure to respond when they do.
  • Create Customer Advocacy/Success function. Customers need to know you are listening and that their requests haven’t fallen in a black hole. Have someone customers know they can go to and count on to receive help.
  • Make your customers owners: If your business is small and just getting started, consider giving customers stock options so they feel a sense of ownership in the company’s success.

Use these three metrics to identify growth opportunities and mitigate risk.Read more about measuring customer engagement and loyalty and 11 questions you can use to improve customer engagement. Ready to begin developing customer-centric metrics?  

 

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