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NEWS29 July 2010

Market Probe advocates a new approach to customer loyalty measurement

North America

US— The satisfaction of customers of customer satisfaction measurement programmes has taken a bit of hit in recent years, says Market Probe CEO TR Rao. The economic crisis and the resulting pressures on costs within organisations has left many of them “questioning the value of the programmes they operate”, he says.

“They want to make sure the information they get they can use for driving growth and profitability,” says Rao. But measuring satisfaction alone “does not correlate very well to business outcomes,” says executive vice president Michael Lowenstein.

Take the example of a customer who is satisfied with a company’s service by virtue of the fact that their expectations were low. Such a customer may well give a company a high satisfaction score but they’d be easily lured away by a competitor brand offering a level of service they can really get excited about.

What companies really should be measuring, says Market Probe, is advocacy – and handily the firm has developed a model to help them do just that.

A proprietary battery of questions is used to segment customers as either ‘advocates’, ‘allegiant’, ‘ambivalent’ or ‘alienated’. Advocates are obviously the most desirable of the various customer segments: emotionally bonded with a brand, they speak positively and actively about it to their friends and family, says Lowenstein. Allegiants he calls “the strong, silent types” – fairly committed to a brand, but not as vocal or passionate about it as advocates.

Still, allegiants are “highly attractive” to organisations, Lowenstein says. “If you can find ways to move them up the scale to become advocates, they offer much more value to the business.” A customer’s worth as share of spend rises dramatically between those two levels, with allegiants accounting for around 30% and advocates around 60%.

Moving to the bottom end of the scale, Lowenstein describes ‘ambivalents’ as the types of customers who are having their expectations met, but those expectations were fairly low to begin with. The real danger territory for companies is if they have too many alienated customers, those that could be described as ‘badvocates’ – the type of dissatisfied customer willing to criticise a company loudly, continuously and publicly.

Some might see parallels between advocates and badvocates and the Net Promoter Score’s (NPS) measure of a company’s promoters versus its detractors. In fact, Market Probe has run comparisons of the two measures. It found that while 90% of its advocates would be classed as promoters under the NPS model, only 56% of promoters would be classed as advocates. Measuring advocacy, it seems, adds shades of grey to the black and white approach offered by NPS.

Lowenstein says: “What we have in advocacy is really a continuation – an evolution. Going back to satisfaction, loyalty, recommendation… it’s the next step in measurement.”

  • Market Probe’s India subsidiary has appointed Deepak Garkhel as senior vice president, responsible for agricultural and custom research and international business. He has previously worked for Gallup, Lowe Lintas and TNS.

@RESEARCH LIVE

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