Customer Transactions Research
Many loyalty measurement initiatives are focused on the overall health of the customer relationship. Rightly so. No one would argue that solid customer relationships aren’t a vital asset to measure and manage. Loyalty in this broadest relationship sense pre-disposes future behaviors that lead to business success. So loyalty measurement programs track specific customer interactions that can be improved to drive loyalty ‘“ e.g., “how would you rate the company’s customer service overall?” But this type of rating sometimes may not be specific enough. Note that it is cumulative, reflecting a customer’s entire experience. Typically, it is not incidental regarding just the most recent experience. Therefore, something more than a relationship survey may be required for particular business objectives.
For example, if we are trying to improve a particular customer touch point, we want to know customers’ recent feelings about it ‘“ “what have you done for me lately.” But a cumulative measure will include all past performance. If someone has had great service for five years, but the last few interactions have been lackluster, the cumulative rating could actually mask the current state of affairs. When the objectives of the research call for it, transaction measurement is the right decision.
First, transaction research is important in its own right. Many customer touch points can be viewed as “processes” and therefore subject to managerial control. Internal metrics are fine toward that end, but we also should let the external customer be the ultimate judge of quality in our process control efforts. With transaction research, we can monitor the service quality of touch point interactions, as seen through customers’ eyes and ensure performance is within certain desired control limits, along the lines of six-sigma.
Second, transaction research is an important follow up to the kind of total relationship measurement described previously. Having identified certain points of customer contact that drive loyalty but need performance improvement relative to competition, transaction research helps dig into such areas in detail, to further diagnose improvement issues, and provide accountability metrics for improvement initiatives. Special research methods can be used. For example, transaction survey metrics can serve as “criterion measures” in an experimental program to improve customer service. Some transaction pre-measurements are taken, preferably in a test market and a control market, then a strategic change initiative is implemented, then some transaction post-measurements are taken to see if customer service actually improved.
It may be helpful to consider some specifics here. Let’s take a company-managed call center operation. From the customer perspective, there are certain essential components. There is the issue of “access” ‘“ how easy is it to get through, am I put on hold, how long do I have to sit in the cue before I get to the right person or place in the system. Then, there is the issue of “contact” ‘“ do I reach a person or is it a push-button or voice recognition system. If a person assists me, was he or she helpful and courteous, and knowledgeable? Then, there is the matter of “resolution”. Was the issue I called about efficiently brought to closure, preferably in one call? The quality of customer experience on dimensions like that can be attested to only by customers themselves, based on their real and preferably recent experiences. From a company perspective, we must have this kind of specific actionable information to make customer-centric improvements. Measurements are essential to be able to prioritize which elements of the transaction must be improved.
Encounters between the customer and the company impact the health of the customer relationship as a whole. In the extreme, a strongly negative or positive moment of truth can be enough to directly impact customer loyalty. In less extreme cases, the transaction may play an “updating” role. That is, a customer carries a pre-existing perception of the company on something like customer service. When the next customer service encounter happens, the quality of that most recent experience works to “update” the overall customer service impression, either for the good or for the bad. Specific research designs and modeling approaches can be used to quantify this updating and establish the level of influence it has on overall relationship loyalty.
Customers and companies have more channels of contact and communication than ever before. Transactions are proliferating, with many now being electronic. Just like any multi-channel marketing initiative, consistency and quality must exist within and across those channels. To ensure this, and for all the reasons just described, transaction research can help facilitate true customer loyalty. With the CRM movement highlighting the importance of each instance and point of company-customer contact, and with the high execution standards called for by popular improvement philosophies like six-sigma, the growth of transaction research as a powerful tool in customer loyalty management has never been more timely.
By: Doug Grisaffe, Ph.D., Professor of Marketing, University of Texas, Arlington
