Customer loyalty is an essential component in the business equations of most firms. After all, loyalty translates directly into a clear return on investment (ROI)-related benefit: lower churn (lower cost), higher renewal and upsell likelihood (more sales), etc. So beyond the obvious – do things that make customers happy, and don’t do things that drive good customers away – what are the actionable steps you can take to systematically build and measure gains in loyalty?
Whether in a digital or “real” context (and note that for an increasingly large demographic segment, digital is real), beneficial word-of-mouth is one of the most important marketplace signals that indicates the development (or erosion) of loyalty. Word-of-mouth and the small social objects – status updates, posts, videos – that are passed around and shared become part of the conversations that define contemporary brands, products, and services. Each of these can be systematically earned and nurtured, and related back as a precursor to loyalty.
As a starting point in assessing these precursors to loyalty consider Touchpoint Analysis, the discipline of measuring customer satisfaction at each and every point where a customer comes in contact with your product or service. Each of these interactions generates a conversation: as my colleague Xavier Jiménez put it, “Loyalty restarts with every customer experience.” Although it may sound a bit like “what have you done for me lately” it’s important to recognize that all interactions count, not just the outstanding (positive or negative) ones.
Sure, an outrageously excellent – or terrible – experience is likely to elicit an immediate tweet. But for every one of those there are many more “typical” experiences, experiences which day-in and day-out shape the ordinary conversations that power your brand’s reputation. These same experiences – because they are associated with specific product and service interactions – also set the prevailing tone for the conversations that form around products and services. In other words, they drive sales.
So the first step is to measure and track your performance at these points of interaction – customer touchpoints – where talk-worthy experiences happen. Consider plotting the results so that you can see how various touchpoints are contributing to the overall perception of your product or service.
A simple way to do this – shown in the figure below – is to assess and rank performance at various touchpoints using a 0-10 scale. Then, for the same touchpoints assess and rank the talk-worthiness – how likely your customers are to talk about this particular touchpoint. For each touchpoint, plot talk-worthiness on the X-axis and assessed performance on the Y-axis. You’ll end up with a map that should be “up and to the right.” In other words, given the constraints that you operate against – no one can do everything – from a social optimization perspective the touchpoints with the highest likelihood to generate a conversation should be the touchpoints for which you recorded your best performances.
In reality it’s seldom this simple: If your map looks more like blob than an up-and-to-right line, focus on the low-performing, highly talk-worthy points first; consider borrowing resources from the “low-talk/high-performance” efforts and apply them to the touchpoints you really need to improve on.
You can do more with touchpoints analysis, too: organize your touchpoint map chronologically and create a simple journey map. Furthest to the left – the earliest time – are the experiences associated with formation of opinion about a brand, product, or service during consideration. Furthest to the right are the experiences associated with renewal and the advanced stages of customer advocacy. The result is an understanding of the customer journey – the path your prospective customers follow when first entering into consideration of your product or service, through to the point where that same customer, after numerous interactions, has declared him or herself a brand advocate.
To see how touchpoint experiences impact loyalty, and indeed to see how loyalty itself is impacting advocacy, take your journey map and organize it into the post-acquisition stages of support, sales, and ideas corresponding to the customer emotions of satisfaction, loyalty, and advocacy, as shown in the figure below.
Activity in any layer can happen independently of any other. But it’s much more powerful when satisfaction (because of happiness with what has been purchased and the way your customer has been supported) leads to loyalty and new sales (because the right products or services are being offered given what has already been purchased) and ultimately to advocacy (because taken together, these are the kinds of experiences given the product or service involved that anyone would wish for anyone else in the same situation).
Why does this matter? Simple: When you place the pinnacle – advocacy – against the management of personal social capital as the basis for talking about a brand, product, or service, it’s clear that from the customer’s perspective it’s all about managing and building his or her personal reputation in a specific domain so that when a recommendation is offered, it is not only followed but contributes further to the accrual of person social capital. From your (business) perspective, this is jet fuel for your brand ascension program – the ascension in customer emotion from satisfaction to loyalty to advocacy. Put all of this together – the reality of contemporary brand-building is that it is built on a negotiated relationship between business and customer – and you are set for success.
Look back at the main points in this article: evaluating performance at specific touchpoints, and focusing your effort on the ones that get talked about, on the experiences that are likely to lead from basic satisfaction to the first of the higher states – loyalty. Next, organizing these touchpoints chronologically to highlight the critical stages in the customer journey where these emotional stages are crossed. Finally, stacking all of this into layers themselves – satisfaction, loyalty, and advocacy so that you can acquire, satisfy, and build brand advocates.
Loyalty begins with each experience: loyalty directly impacts ROI and leads to less-fiscal but nonetheless essential realization of advocacy. Follow the steps above, and at the same time score the power-up bonus by showing your customers how to build their social reputation in the domains which reflect their personal passions. Come back next month for more on how to do just that, and how to take reputation to the next level.
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