Real value of customer recommendation

Real value of customer recommendation

Over the last few years, tracking recommendation as part of customer satisfaction or CEX measures has been widely used across many industries. Since the introduction of the Net Promoter Score (NPS) by Fred Reichheld in his 2003 Harvard Business Review article “One Number You Need to Grow”, NPS has been an important metric for companies globally. Recently, NPS has been under attack in articles with headlines such as “NPS is Dead”. This prompted a case study to gain insight in what it really means when consumers report their likelihood to recommend a company, service or brand, and what is the real value to business?

Value of Customer Recommendation

The case study extended over a year (2016) where consumers in the automotive industry were interviewed around their experience. As part of a qualitative interviewing platform, consumers were asked about the likelihood to refer the business because of their purchase experience. As the overwhelming majority (90+%) reported that they would refer, it became important to understand what they meant and why they felt inclined to do so.
Does this measure mean the business is doing exceptionally well? What is the power of this feedback?
The challenge with quantitative measures is that customers cannot explain their views. This is where the qualitative narrative is so valuable in understanding what customers mean or want to say. Consumers’ understanding of “recommending the business” proved to be very diverse and hence misinterpretation of findings can easily occur. Consumers had the opportunity to qualify their reasons. The following clusters of reasons were identified:

  • emotional experiences
  • staff making the difference
  • customer service
  • process
  • brand
  • facility itself (such as proximity)

From a brand perspective, it is important to consider how relevant each cluster is and what impact it will have on the business, especially in relation to core values, strategic and competitive positioning.

ROI of recommendation – “I will” vs “I have”
Recommendation is not just a trackable metric. On the one hand it reflects positive experiences with the brand, but even more importantly, the power is ignited when the reason for recommendation, is compelling enough to act!
The willingness to recommend indicates an intention, referred to this as “intentional recommendation”. However, when consumers are motivated enough to actively recommend the brand “behavioural recommendation” the value becomes evident. When consumers enthusiastically and convincingly share their experiences and stories with others – friends, family, colleagues, etc, their personal and trusted endorsement is the REAL power of recommendation. In the study, 20% (of 90+% intentional recommendations) were moved to act and actively referred the business.

What will “move” consumers to recommend your company?
The value of good customer service cannot be under estimated. However, it is the emotive aspect of the experience that “moves” consumers into action. How they feel after the interaction with a brand. Brand “evangelists” should be created, nurtured and understood! Their stories move people into action! They are “pulled” towards the brand because they too want to experience the same.
The real value of the behavioural recommendation was very significant in the study. Over 60% of new customers to the brand were influenced by recommendation of customers! So, if only 20% of customers channel 60% of new business, the importance of behavioural recommendation takes its rightful place as ROI.

How can behavioural recommendation be increased?
Companies should ask: “Are customers moved enough to share their great experiences when they interact with us?”

Design customers’ experiences
Customer experience should be designed! It does not happen without conscious effort and planning. It requires teamwork, review of experiences from the outside-in … from the customers’ perspectives. Feedback of customers (through various channels) point to or illustrate pain points, expectations, and what contributes to emotional experiences.
At each point ask: what is the desired emotion you want your customers to experience?
Every touch point, channel and moment in the process should be reviewed and specific consideration should be given to how the team can achieve the following goals:
Creating memorable experiences through
1. The unexpected (surprise)
2. Connecting on a personal level
3. Consistently providing excellent customer service
4. The ease of doing business (least effort)

The Consumer Psychology Lab is a customer experience consultancy with extensive know-how of measuring emotion. Our highly skilled psychologists interview customers about their experience and provide our clients with deep insights into consumers’ experience and behaviour. We are also passionate about equipping companies with the most suitable CX tools and skills.