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Michael Lowenstein, Ph.D., CMC Thought Leadership Principal, Beyond Philosophy

When Customer Retention, my first book on customer behavior was published, now over 20 years ago, one of the strongest reactions voiced was my contention, and the proof offered, that customer satisfaction and customer retention were fundamentally different concepts, and that they required different measurement protocols. Many felt that customer satisfaction and retention were the same. In reality, they are very, very different, conceptually and measurement-wise. Retention is about behavior, the motivation to remain a customer, whether at lower, equal, or higher purchase levels. Customer satisfaction is not about any of that.

Customer satisfaction has always been largely about attitudes about a product or service experience. Attitudes are superficial and tactical, essentially dealing with transactions and interactions rather than longer-term experiences and relationships. It is, as well, sometimes about behavioral intent, not behavior itself. Customer satisfaction is also about the tangible, functional, and rational components of value (time/timeliness, accuracy, completeness, suitability, price, functionality, etc.) of value delivery. For decades, satisfaction has been a cornerstone of what we understand to be total quality in products and services, as perceived by the customer. Unfortunately, customer satisfaction has been proven to have very little impact on, or connection to, actual customer behavior. I’d submit that the hourglass sand on satisfaction meaning and actionability have finally run out.

Even total quality icon W. Edwards Deming believed that customer satisfaction was not an ineffective metric for understanding the impact of satisfaction on customer actions. In his book, Out of the Crisis (MIT Press, Cambridge, MA, 1982, p. 141), Deming said: “It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain. Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them. Fully allocated costs may well show that the profit in a transaction with a customer that comes back voluntarily may be 10 times the profit realized from a customer that responds to advertising and other persuasion.” This quote appeared in Customer Retention (ASQ Press, Milwaukee, WI, 1995, p. 9).

When. 35 years ago, Deming said “Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them”, he was talking about what, for the past decade, we have understood, and effectively measured and applied, as customer advocacy behavior.

The satisfaction (and delight, NPS®, and CES) metric does not take consumer brand favorability and volume/type of positive and negative online/offline word-of-mouth into consideration. And, as many consulting organizations have determined, today these factors are critical for both understanding leveraging downstream customer behavior. Advocacy and bonding, principally based on the kind of positive/negative customer word-of-mouth and impression of the brand or vendor that Deming identified, has tremendous power and potential to create desired high-end customer behavior. Word-of-mouth, however, is a double-edged sword; and customers’ negative communication, as much as praise, can have a damaging effect on other customers and non-customers, as well as the communicating customer.

As a core performance metric, customer advocacy is very much alive and well in both B2B and B2C products and services. Scores of studies, in many verticals around the globe, have demonstrated that informal word-of-mouth and brand reputation are essential decision-making levers. If anything, due to the more critical nature of touch points, performance, brand perception, and relationships in B2B, bonding may well be more important in this arena than in the business-to-consumer world. Critically, in both B2B and B2C performance measurement, there is little evidence of metric flatlining or reaching an actionability plateau.

So, all of that said, is there a role for tangible quality, as measured by customer satisfaction, on customer behavior? And, what is the most actionable way to measure it? Based on extensive consulting, training, and research experience, in b2b and b2c verticals around the world, I’d suggest that much of tangibility is about the emotional and memorable underpinnings of trust and confidence these elements represent. As noted in many of my blog posts and white papers, there is an emotional subtext to all components of value delivery, whether tangible or intangible, whether transactional or experiential over time. Especially with regard to rational value elements, these basic “table stakes”, when delivered to spec or as expected, will help drive trust, confidence and future consideration. When the basics are not attained, tangible element under delivery will undermine trust, and influence negative downstream behavior.

Some experiences are pleasurable in the subconscious, some are painful, some are superficial, some go deep. They can create sensations and feelings that can be a challenge to articulate, but which cause people to take action. Translating these subconscious emotions and feelings is the ‘holy grail’ of customer journey design.

Seemingly forever, marketers and researchers have been trying to identify stable and predictable links between what consumers say about product and service experiences, what they mean, i.e. the emotional and unconscious underpinnings about what they really think and believe, and what they do in terms of actual decision-making and actions in the marketplace.

There is an intersection between customer experience with a product or service, internal reaction to that experience, informal peer-to-peer communication about the experience, and downstream customer decision-making. It occurs in the personal emotional and subconscious distillation of that experience in creating memories forming the customer’s behavior. This may sound a little technical and psychological for some, but reckoning with the meaning of emotional and subconscious response to experiences has important ramifications in the marketing world. It can mean knowing what customers really want, whether they will stay or leave a vendor, and whether they will be loyal brand advocates or not. We’ve come a long way from customer satisfaction.

Republished with permission from CustomerThink.com