Answer this Question

targamedia: Add as a Colleague
10/06/2009 12:04:20 PM EDT

Good discussion around the connection between loyal customers and profits. Advocates are not always the biggest spenders. Their inherent value is that they're with you for the long haul (huge asset in a down economy). They help you in tooling your best message, and most importantly, they help corral new business to increase profits. Some loyal clients might actually be "prospects" instead of clients. Long-time research has shown the value of a client is calculated not only on the revenue they create, but also on revenues from referrals. I think it's an exponentially powerful formula.

Cason Lane: Add as a Colleague
09/01/2009 12:25:40 PM EDT

The key is to recognize that customer satisfaction is not the end game. Customers are satisfied with the product, service or brand? So what? How does that attitude translate to a meaningful behavior? Instead of just measuring satisfaction, companies can use surveys and other tools to measure how that satisfaction influences things like spending, likelihood to buy, likelihood to stay, likelihood to make a referral, etc. This measurement does not come in the form of a one-size-fits-all correlation between satisfaction in revenue. It comes through a thoughtful measurement strategy that connects customer behavior to a company's goals. Cason Lane cason@casonlane.com

eric@6sigmarketing.com: Add as a Colleague
09/01/2009 10:53:20 AM EDT

On the contrary there is much evidence that customer satisfaction has little or no relationship to profitability. Customer value, on the other hand, is the relationship between quality and price of a good or service and has been shown to be the best leading indicator of market share and profitability. Check out Six Sigma Marketing: From Cutting Costs to Growing Market Share (ASQ Qualty Press) for a comprehensive treatment of satisfaction and value. Tripp has got it right.

tribabbitt: Add as a Colleague
08/31/2009 7:53:12 PM EDT

I'd be careful to equate customer satisfaction with profit, it may give the wrong impression. The reason being that customer satisfaction typically only measures how well we did something for the customer, not what matters. Such surveys may ask questions like "Did the CSR show empathy?" This does not display anything to what matters. I may say I am glad I got my question answered, but does not represent whether a customer wanted to call in the first place (failure demand). Customers don't see things the way organizations do, they see things end-to-end, not function-by-function. You would be better off finding out what matters to customers. Regards, Tripp www.newsystemsthinking.com