The Temkin Group loves to publish insightful information that is very important and easy to get your head around. They derive this information for what appears to be an endless stream of consumer surveys and they present it in ways that are clear and timely.
In their February 23, 2017 post “Customer Experience Leads to Recommendations (Charts for 20 Industries),” the Temkin Group published two figures, which are the subject of this post. Their post also includes 20 charts, one per major industry, which I am not going to talk about here. You can see them by following the previous link.
This figure shows the impact of Customer Experience (CX) on loyalty:
When discussing loyalty, the Temkin Group looks at four outcomes of being loyal; Likely to Repurchase, Recommend, Trust, and Forgive. Before discussing this further, I am including this figure so you can understand the Temkin Group’s terminology:
The second figure includes the wording of the questions asked about each outcome, the scale used, and how they define “goodness.” For repurchase, forgive, and trust they use a 6-point scale, with anchors on each end and consider the top two boxes as goodness. For recommend, they use the NPS 11-point scale and consider the top three boxes to be goodness. It really doesn’t matter what you consider goodness in your own program, it is only important that you be consistent so you can trend the data and get meaningful results.
Interrupting the Data
I will focus on the Repurchase chart of the first figure to talk through how to think about this data but everything I write is equally applicable to all four areas of loyalty.
The first point to note is that the chart does not tell us what percent of the respondent’s ratings fell in each of the five satisfaction categories (very poor, poor, okay, good, and excellent) but only the percent of each category that satisfies the requirements defined in the second figure. Also, you should not assume that the percent in each category is higher than any of the lower categories. Many times, we see that the percent of okay or good exceeds the percent of excellent.
The second point is that the columns represent the percent of responses that are “likely” to repurchase as defined in the second figure. This means that 86% of everyone who reported having an excellent interaction also rated a six or seven on the likely to repurchase question. At the other end of the CX scale, 13% of the people who had a very poor experience were also likely to repurchase from the company.
The conclusion here is that the better the customer’s experience, the more likely they are to demonstrate loyal behavior. For your internal improvement program, I always recommend focusing on the top box, the best choice, instead of considering the top two or three boxes as goodness. I recommend this because the loyalty percentage would be less if the data was presented for just the top box (which generates the largest loyalty)…why delude yourself? You should always be looking for the real truth and not giving yourself a false sense of security.
The data also leads us to two questions:
How come 14% of people having an excellent experience would not definitely repurchase?
How come 13% of the people having a very poor experience would definitely repurchase?
Why would very satisfied customers not repurchase?
As you might expect, there are a number of possible reasons:
They have no need for another one. For example, you bought your youngest child a snowsuit and are planning to relocate to the south before the next snow season.
You are working for an organization that prohibits you from endorsing a product. This is very common in both the healthcare industry and in government.
You purchased the product in an outlet and have no idea where to go to get it again in the future.
Why would very dissatisfied customers repurchase?
Again, a number of reasons:
The supplier has a real or virtual monopoly. For example, a real monopoly exists in most communities with respect to home water delivery. Also, many families have only one cable provider. You may hate them but believe that something is better than nothing.
Some communities have multiple cable providers but the cost and hassle of switching means that some customers are dissatisfied and yet will renew their contract when it comes up for renewal.
People are loyal to medical professionals even though they run a terrible office. If you have a “painless” dentist who is never on schedule, you will very likely keep going back because the frustration of sitting in the waiting room is small compared to benefit having a pain-free procedure.
The results and conclusion can easily be changed
While these examples are real, they are not necessarily permanent. If a new dentist moves into your area and some of your friends try the new person and are amazed with their experience, then you are highly likely to switch. I am sure you can construct similar reasons why people would switch for all the examples I just listed.
The point here is that none of us has customers for life. If we don’t think about our customers as being leased instead of being owned, then we are setting ourselves and our business up for a major shock.
For example, the de Havilland Comet jet made its first commercial flight in 1952 and the Boeing 707 made its first commercial flight in 1957. The Comet never really caught on and Boeing thought it had cornered the market with the 707. But by 1972, the first Airbus A300 made its first flight and now Boeing and Airbus equally share the commercial market for large jet transports. There are no customers for life.
Even if your product or service is better than your current competition, you are always vulnerable to being eclipsed by someone with either a better product/service or a better experience. The solution to both is continuous improvement with both your products and services and the way you engage with your customers.
Remember that business is a marathon, not a sprint.