’Moving the needle’ on Customer Loyalty isn’t just about measurement

20 September 2006 - SYDNEY — Speaking at a Synovate seminar today, Dr Larry Crosby, a recognised world leader in the field of customer loyalty, said many organisations were not getting the most from customer satisfaction studies.

Dr Crosby said that customer satisfaction studies are one of the most common market research activities undertaken across business and government sectors.

“While significant parts of research budgets are devoted to finding out what customers think, the return on this investment often falls well short of the potential. However, it is possible to ’move the needle’ and increase levels of customer loyalty - with a measurable impact on the bottom line for those organisations that achieve it,” he said.

Larry Crosby has been the Global CEO of Customer Loyalty for Synovate since 2004 and was speaking to approximately 80 guests in Sydney this week as part of his Australian visit to meet with a cross-section of Synovate clients across the country.

Crosby’s customer loyalty framework has been developed and refined over the last 30 years in his time as a widely regarded practitioner and academic in the field of customer satisfaction and loyalty. One premise underlying his approach is that Customer Loyalty should be a holistic, three-step process that doesn’t stop at the measurement phase.

“We see many organisations measuring customer satisfaction and thinking that, by measuring it, somehow their results will shift over time. That just doesn’t happen. Others go the next step and model their results to see what factors are driving customer loyalty. That is great, but it takes a vital third step to really create a positive change – organisations need to actively manage their business by putting customer loyalty at the centre of their business strategies. This means being prepared to do things differently and spend money differently, by re-allocating resources towards the things that matter to customers,” Dr Crosby said.

Evidence from US studies shows that organisations that successfully embrace customer loyalty in their business strategies outperform the market average on the basis of stock market performance. For example, a study of businesses with a strong customer loyalty focus delivered stockmarket growth close to double the Dow Jones in the same period. Examples of businesses achieving these superior results included Walmart, Toyota, Southwest Airlines, Whirlpool and Apple.

One of the more surprising findings in many of the customer loyalty studies presented by Dr Crosby is the consistently high impact of emotional factors, over rational considerations.

"It would be easy to think that people are loyal to a preferred brand when the rewards for using that brand outweigh the costs associated with it. However, studies consistently show that, beyond this rational way of thinking, it is often the emotional connections with brands that further cement loyalty, and create the disposition to act favourably (ie to purchase again, spend more, recommend it to others).

“This is about winning customer’s hearts as well as their minds, and it is the more difficult side to effectively manage,” explained Dr Crosby.

One of the key discussion points from the session was the link back to employees. Mark Poolman, Executive Director and Head of Customer Loyalty for Synovate in Australia noted: “It is perhaps no surprise to hear that employees are closely linked to achieving positive results in customer loyalty. Studies have found a direct, measurable link between employee satisfaction (and the degree of employee-organisation alignment) and customer loyalty, which in turn has a direct impact on the bottom line.”

Dr Crosby said: “The implications for business are clear – we can’t just measure customer satisfaction and expect things to change. Organisations need to understand what will make the greatest difference to loyalty and then actively manage their organisations accordingly.”

About Larry Crosby

Larry has over 30 years of academic and business experience in strategic marketing and market research. During his career he has been a dominant contributor and leader to the field of customer satisfaction measurement. Working with major global companies, he continuously redefines and improves the use of customer research as a strategic and actionable management tool.

Larry helped found the Centre for Services Marketing and Management at Arizona State University and continues to serve on the Centre’s Board of Advisors. He is an honorary faculty member of the Swedish School of Economics and Business Administration in Helsinki, Finland. He has presented at many national and international conferences, and has authored over 60 articles and papers, which have appeared in leading business and social science publications.

Larry currently heads Synovate’s Loyalty practice worldwide, bringing his experience to clients globally.

For more information on Synovate Loyalty visit www.synovate.com/loyalty.

About Synovate

Synovate, the market research arm of Aegis Group plc, generates consumer insights that drive competitive marketing solutions. The network provides clients with cohesive global support and a comprehensive suite of research solutions. Synovate employs over 5,500 staff in 108 cities across 50 countries.

For more information on Synovate visit www.synovate.com.

Contact Information

Mark Poolman

Executive Director - Head of Customer Loyalty Synovate

Synovate

Contact via E-mail