Roderick Morris, Senior Vice President of Marketing & Operations, Vovici

The correlation between loyalty and revenue, a relationship that has continued to grow in every industry during 2009, eludes many businesses. The absence of a formal and maturing customer experience management (CEM) program leads many companies to fail on delivering experience-based differentiation that drives bottom-line growth. In June 2009, Vovici conducted a Customer Experience IQ (CEIQ) study to understand current CEM best practices and uncover the primary drivers of customer loyalty. The study was sent to hundreds of customer experience professionals across the globe and helped Vovici understand the strategies and habits of companies with the most loyal customers. The study showed that the economic downturn has caused an upturn in interest in measuring the customer experience. In 2008, just under half (47 percent) of survey respondents said that CEM was important, while in 2009, almost two of out every three organizations (63 percent) say CEM is important to their business.

But the story does not end there. The study found that there's a disconnect between what organizations say and what they do when it comes to CEM programs. Almost 75 percent of respondents say they have a CEM strategy, yet less than half of respondents say they have formal programs and compensation systems in place to implement the strategy. According to the CEIQ study, the most effective CEM programs include a standard set of metrics by which the customer experience is measured. Organizations with the highest customer loyalty use one of the many standardized measures (NPS, the Apostle model) or a set of proprietary metrics in order to apply consistent measures across the organization.

Largely replacing customer satisfaction, or CSAT, as it is often referred, loyalty metrics seek to better predict how customer experience will impact bottom-line growth. Although an integral part of loyalty, satisfaction alone did not accurately depict customer defection, spend, and recommendation. Research consistently finds that 60 percent to 80 percent of lost customers reported being "very satisfied" or "satisfied" just prior to defecting. Which is why CEM — decoding and applying the changing factors that drive customer loyalty — is so important. Operating under the idea that loyalty can be measured, monitored, and the resulting insights applied, CEM looks to create customers that make the conscious decision to purchase, not of inertia or absence of alternatives, but in the spirit of a strongly positive relationship.

Embrace a Single Platform and Set of Measures
An effective loyalty program requires a systematic approach to listening, interpreting, reacting, and monitoring. Cultural alignment around a centralized platform and single set of feedback scores is central to creating a program that represents all aspects of customer experience and their interplay. The CEIQ study found that organizations with the highest customer loyalty share CEM and VOC feedback across organizational boundaries throughout the organization. Feedback is not held in silos; rather, it is shared freely throughout the organization and viewed as a strategic corporate asset. Investing in an enterprise feedback management (EFM) platform allows efforts to be coordinated, best practices shared, and various systems integrated into a single view of the customer. Using a respondent panel, surveys can be personalized, making them shorter and more relevant. This helps drives response rates while respecting relationships with customers. EFM also provides for workflow and user controls to enforce best practices and support the end-to-end survey process. Lastly, an EFM solution facilitates the sharing of data through reports, incorporates alerts set against events and thresholds, and can eliminate redundant tools and archaic processes.

Contextualize Feedback with CRM and Other Data
The CEIQ study found that organizations with the highest customer loyalty integrate what they know about customers from customer relationship management (CRM) systems into their feedback efforts. CRM integration enables personalization of surveys and invitations, reduces survey fatigue, and helps to maintain high response rates. Also, by placing relevant feedback insights in the locations where business users need it most — in a sales force dashboard, for example — employees can act quickly and monitor feedback to mitigate potential issues.

Share Actionable Insights across the Business
Feedback silos have been one of the most vexing issues with CEM initiatives. Concerns over security and the unavailability of technological and methodological resources often limit the reach of feedback insights. Customers that can enable a secure system of broadcasting feedback across their business are best positioned to apply customer requirements. The CEIQ study showed that organizations with the highest customer loyalty share customer feedback across organizational boundaries throughout the organization. Distributing the resulting feedback and insights from customers allows organizations to turn data into actionable information.

Focus and Right-Size Social Media
Twitter and Facebook have had phenomenal growth of late; as of July 2009, year-on-year growth rates were 2,614 percent and 124 percent, respectively, according to comScore. That is a pretty blistering pace of growth for Twitter, but remember that at the end of April 2009, Nielsen Online estimated that 60 percent of Twitter users quit after a month. We have all heard the stories of companies monitoring online sentiments, responding to customer grumblings, and even reducing hiring costs through Twitter, Facebook, and LinkedIn. These microblogging and social platforms offer an inexpensive and casual way to build relationships and an ongoing dialogue with customers.

But building a base of loyal customers is about more than 140-character conversations. It is an intentional strategy, focused on creating an internal culture obsessed with customer needs. Businesses investing in formal CEM or VOC programs cannot rely solely on the unstructured feedback that is independent of an overarching loyalty strategy. Social media platforms can be an important element in this journey, but should not replace or act in isolation from other loyalty efforts. Ask yourself if your organization is living the CEM principles uncovered in the CEIQ study. Are you truly acting to make CEM a formal initiative so that you can really listen to your customers, or are you simply talking about it?

Roderick Morris is senior vice president of marketing & operations at Vovici, a leading provider of survey software and enterprise feedback management (EFM) solutions. He leads marketing, product management, customer training, and customer support.