How committed are your customers?

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Many corporates measure customer satisfaction but is it an effective indicator of customer lifetime value?

Most weeks I get a telephone call or an email from a company wanting to do a customer satisfaction survey e.g. following a call to get technical support, or after having a car serviced.

Over 80% of corporates measure customer satisfaction. Although there may be good reasons to do satisfaction surveys especially following changes in process or training or staffing they can be misleading as often customer satisfaction surveys do not correlate with future customer behaviour or customer lifetime value

Customer commitment is a more powerful measure

Customer commitment can be measured in a number of ways and is a better indicator of future customer behaviour and therefore custome rlifetime value. The challenge for companies is to get as many high value customers as committed to the brand as possible.

Around 20% of corporates measure customer commitment but just 10% measure the commitment of high value customers.

Example of companies with very high levels of commitment include Apple and First Direct.

Apple achieve this through providing exciting, innovative technology that's easy to use and fun to share. Even Apple are unlikely to have a permanent number one share in volume although they do well with iTunes, iPods & iPhones. However, their focus is to have a dominant share of value in each of their markets knowing lower cost producers will follow them after a year or so.

First Direct provides legendary levels of telephone customer service which is something no other financial services brand (possibly apart from Egg) is able to get close to.

How to measure customer commitment?

The specific method will depend on a number of factors including your industry sector, brand, product or service and customer type. Typical questions include:

• will you continue buying from us?
• do you believe other companies can co a better job at meeting your requirements?
• have you recommended us recently?
• would you recommend us to a friend or colleague?

Remember to segment the results by customer value as it is more important to achieve good commitment results from high value customers.

Published 28th February, 2011

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