Research shows, experience validates: Systematically surveying customers and then "Closing-the-Loop" increases customer loyalty
A QuestBack user that regularly surveys their large global customer base found in a recent survey that for those customers who had responded to prior customer surveys, Net Promoter Scores were 19 points higher than for customers who were 1st time survey participants. We have long believed that a multiple cycle and action supported customer feedback process based on e-mail delivered customer surveys would have loyalty enhancing effects. Our experience with this process validates a number of earlier research efforts undertaken by different groups. Our customers' NPS score differentials are in the chart below. Other research is listed and attributed further on in this post.
The Feedback Management process implemented by this client included action taking based on daily reports during the duration of the survey, which routed dissatisfied customers - i.e. those dissatisfied with various elements of the customer experience - to appropriate internal actors (Support Staff, Account Managers, Product Managers, etc.) at the client for follow up.
Prior surveyed participants had all experienced some form of "loop closing" action in response to their earlier feedback. In this case, surveying and "closing the loop" clearly helped to build a more loyal customer base.
Some research these results appear to validate:
In the second year of a two-year study conducted by Development II, Inc. of Woodbury, CT, researchers found a noticeable increase in the top-box overall satisfaction scores from those customers who took the survey again in the second year when compared with new customers. For repeat customers who received a follow-up call after the first year’s survey, satisfaction levels in their second year increased to 24%. Respondents who believed the company is taking substantive action based upon their feedback, total satisfaction increased to 41%.
And there is the 2002 Study by Dholakia & Morwitz - Published in the Harvard Business Review titled: "How Surveys Influence Customers"
The research shows that simply asking customers their opinion can increase their profitability over the long term.
The full article is available at:
www.neokoncept.com/onlineSurvey/pdf/How_Surveys_Influence_Customers.pdf
Some excerpts from the article:
- Marketers have long appreciated that surveys engage people; a single yes-or-no question on a direct-mail envelope can induce them to look inside. But can a company survey influence customers’ loyalty or buying habits? Research over the past two decades has shown that it can, but the studies have been narrow–looking at how surveys affect attitudes in the short term or influence one-time behavior, like a single purchase. We set out to study the scope of this survey effect, and we were astonished by what we found.
- A year after the survey was conducted, the customers we surveyed were more than three times as likely to have opened new accounts, were less than half as likely to have defected, and were more profitable than the customers who hadn’t been surveyed. These differences reached their maximum levels several months after the survey was done and persisted throughout the year. Even at the end of the year, surveyed customers continued to open new accounts at a faster rate and defect at a slower rate than the people in the control group.
- Several theories of consumer psychology might apply. The simplest is that satisfaction surveys appeal to customers’ desire to be coddled, reinforcing positive feelings they may already have about the surveying organization and making them more likely to buy its products. Surveys may also increase people’s awareness of a company’s products and thereby encourage future purchases. More subtle is the idea that the very process of asking people their opinions can induce them to form judgments that otherwise wouldn’t occur to them–that they really do like a company’s estate-planning services, for example. These so-called measurementinduced judgments, the theory holds, can influence later behavior.
- Our findings may dismay marketing researchers, who strive to gather information untainted by their survey instruments. But they raise the compelling possibility for marketers that conducting surveys, especially when customers are satisfied with the organization, can also enhance loyalty and profitability.
