Customer Advocacy Behavior Measurement: Part 2

Customer service experience optimization and customer advocacy behavior

Published: Monday, August 15, 2011 - 12:58

There is a strong recognition that customer service is especially important in the branded experience. Service is one of the few times that companies will personally interact with their customers. This interaction helps the company understand customers’ needs while, at the same time, it shapes customers’ overall perception of the company, influencing both downstream communication and future purchase. Customer service will be the focus of Part 2 of this two-part article.

Customer service representatives (CSRs) across the United States handle an average of 2,000 customer interactions each week. If CSR’s are not aligned with the overall experience strategy, indeed are not directly involved with creating and executing the strategy, this can represent 2,000 opportunities to put customers at risk or lose them. Placing the customer first or having complete focus on customers—two of the clarion calls of customer service experience optimization—have a hollow ring if strategies aren’t drilled down and reduced to a point where CSRs’ daily efforts through interactions and support processes can have a positive impact on customer loyalty. 

Companies that have succeeded in building excellent reputations and are also earning and sustaining customer loyalty and trust, understand that service transactions are active, valuable states in a relationship. They require an emotional, as well as a rational, connection between the company and the customer through all possible touch points: product experience, customer support and other employee interaction, advertising and promotion, and formal and informal social word of mouth communication. While functional and rational components of value are important as must-have deliverables, it is the emotional bank account—the level of trust that has been earned, often through service experiences—that keeps the customer, or not.

In this part of the two-part article, the focus will be on expressed and unexpressed complaints. Why?  First, complaints are measurable. Complaints are about customer trust. Complaints, especially about customer service processes, have both a total quality (TQ) and quality function deployment (QFD) core. But despite conventional wisdom to the contrary, most complaints, whether business to business (B2B) or business to customer (B2C), are never registered by customers. Missing this kind of information has the power to undermine any customer process or set of processes, and generating otherwise unregistered complaints can profoundly influence relationship quality.

Several years ago, a major Midwest financial institution conducted a study of the loyalty leveraging effect of expressed and unexpressed complaints on its commercial customers. The bank found that about half of these customers had service complaints. Of those with a complaint, only about half had expressed their complaints despite ongoing contact between the customers and bank employees. In other words, fully one-quarter of the complaint “enchilada” was missing.

When customers do complain through customer service operations—like the Campbell Soup Co.’s Consumer Response and Information Center (which takes more than 300,000 calls a year), or the General Electric Answer Center, which is open 24/7, every day of the year—or through traditional contact media or via outbound complaint solicitation, how the complaints are received and acted upon makes all the difference in their effect on customer trust levels and resulting behavior.

The potential for complaints to negatively impact customers’ future purchase intent and recommendation likelihood should never be overlooked. In loyalty research for a client, a major manufacturer of paper and related products, it was determined that 40 percent of their high volume accounts had serious performance complaints. These complaining customers were 15-percent less likely to be positive about continuing to purchase from this client than those without a complaint.  Other studies show similar negative loyalty effects of complaints.

Customers experiencing inefficient or insufficient complaint resolution are not only less likely to purchase from or recommend that supplier, they will spread their negativism, telling anywhere from 2 to 20 people offline and potentially limitless number of people online about their bad experience. Poor service and complaint resolution are principal drivers of customer alienation and sabotage.

With numbers like these, it’s little wonder that, left poorly handled or with unresolved issues, complaining customers can, and will, sabotage even the most carefully crafted marketing or customer loyalty program. The incidence of poor customer service experiences demonstrated by many online and bricks-and-mortar companies has been actively reported in the media. Angry customers will tell each other, post comments on rating sites, and will even set up their own websites so that other upset and former customers have a forum for their negative experiences. 

So, having seen how complaints can hurt, how can complaints complement, or even enhance a company’s customer trust-building and loyalty efforts? There are three ways:
1. Actively encourage customers to contact the company with questions, comments, problems, or complaints, and make it as easy as possible. Further, make it a receptive, open and honest dialogue between company and customer which everyone—including noncustomers and employees—can see.
2. Identify the root causes of all complaints, registered and unregistered, so that their sources (staff, messaging, or experience processes) can be addressed and corrected.
3. Enhance the effectiveness of problem and complaint resolution processes so that customers are given the most efficient and effective contact venues.

There is a fourth method to consider when approaching complaint generation and management; and it may be the simplest and most effective of all. Most companies, in their customer value and performance research, fail to ask about complaints, especially those that have not been registered. This needs to be supported. Complaints, after all, are a different category of involvement with a supplier than just low performance ratings. They’re much more intense and personal.

4. If we can identify unresolved complaints that have been registered and those complaints that haven’t been registered (including the reasons for nonregistration), this represents a complete inventory of customer complaints and sheds new light on the complaint processes and consequences. Their specific potential impact on customer loyalty behavior can then be modeled for prioritized action.

Returning to the bank example, those commercial customers who registered their complaints—and then were handled in a positive manner by the customer service department—indicated a very high level of loyalty toward the bank. In what has come to be understood as conventional wisdom resulting from studies in many other industries, it was actually higher than those who had no complaints. On the other hand, those customers who hadn’t expressed a complaint (even though they actually had complaints when asked) had bank loyalty levels about two-thirds as high as those whose complaints had been expressed and positively resolved. The customers whose complaints had been handled poorly had loyalty levels only one-quarter as positive as those whose complaints had been handled well.

Figure 1: Midwest Bank expressed/unexpressed complaints results

Lesson learned

The lesson here, which has been proven again and again, is that if a company encourages customers to engage in dialogue when there are performance problems or concerns, those opportunities for enhanced value provision actually create stronger, more bonded relationships.

Having a database of the registered and unregistered complaints gives a company the entire spectrum of customer negativity contributing to potential churn, enabling corrective action to be much more focused and relevant. When this is combined with customer profiles, contact data, assessment of key rational and emotional elements of performance delivery, and metrics about intended behavior through targeted research, companies can be far more effective in optimizing customer service experiences and downstream advocacy behavior.

Concluding thoughts: experience, reputation, trust, and advocacy

Depending upon how much a customer comes to trust a brand or company, it is possible for neural, social communication, or word of mouth, to represent the propensity for that customer to act and also to influence others by telling about his or her experiences. If the experiences have been seen as consistently positive, the customer can become an advocate for the brand or company. If the experiences have been negative, the customer can become unconnected and alienated, which undermines—even sabotages—the image and reputation the company is endeavoring to build with customers and prospects.

What extensive research into the drivers and results of advocacy behavior has revealed is that active communication to others (positive or negative) highly correlates with the customer’s own downstream behavior and directly or indirectly influences the behavior of others. The media for communication these impressions and opinions can be as sophisticated as online communities, blogs or forums, or simple, offline back fence or water cooler chat.

Customer advocacy, built on trust achieved through individual experience, is a legitimate and strategic objective. It links closely with the number of companies or brands in a customer’s consideration set, degree of favorability, likelihood to repurchase, and likelihood to recommend. Arguably, because share of wallet correlates so closely with advocacy level over time, it defines the relative strength of a brand or company’s franchise within the marketplace.

Going forward, to generate lasting trust, positive image and reputation, and continued consumer confidence for brands, products, and services, companies will need to focus on customer-centric leadership, as well becoming more transparent and authentic. They will have to ramp up inclusion of employees and customers, and more actively engage in offline and online dialogue with all stakeholders, particularly their advocates. 

As presented in my new book, The Customer Advocate and The Customer Saboteur,  successful companies will, at the end of the day, stress inside-out (employee and process-based) and outside-in advocacy in all of their actions and processes to both drive positive business outcomes and be accountable to all of their constituents. A leading management consulting organization summed this up very well: “We predict that customer advocacy will be the new focus for business leaders. Customer advocacy will become the single most important initiative that cutting-edge, forward thinking companies will adopt.”

About The Author

Michael Lowenstein

Michael Lowenstein is executive vice president of MarketProbe, a major market research and consulting organization and the author of The Customer Advocate and the Customer Saboteur (ASQ Quality Press, 2011). ASQ invites readers to learn more from Lowenstein, about the world of customer-led communication and behavioral influence, through this complimentary ASQ webcast.