The real value of customer recommendation

The 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, the NPS has been an important metric for companies globally. Recently, the NPS has been under attack in articles with headlines such as NPS is Dead. This prompted a case study to gain insight into what it really means when consumers report their ‘likelihood to recommend’ a company, service or brand, and what its real value to businesses is.

The Value of Customer Recommendation

The case study extended over a year (2016) where consumers in the automotive industry were interviewed about their experience. As part of a qualitative interviewing platform, consumers were asked about the likelihood of them referring the business as a result of their purchasing experience. With an overwhelming majority (90+%) reporting that they would refer the company, 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? Where does the power of this feedback lie?

The challenge with quantitative measures is that customers cannot adequately 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 the findings can easily be misinterpreted. When consumers had the opportunity to qualify their reasons, the following clusters were identified:

  • emotional experiences
  • staff making the difference
  • customer service
  • the process
  • the brand
  • the 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 as well as 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, its power is ignited when the reason for recommendation is compelling enough to act.
The willingness to recommend indicates an intention, referred to 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 underestimated. However, it is the emotive aspect of the experience that moves consumers into action, i.e. how they feel after the interaction with a brand. Brand evangelists should be created, nurtured and understood because their stories move people into action. They are pulled towards the brand because they want to experience the same.

The real value of the behavioural recommendation was very significant in the study. Over 60% of new customers 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 among ROI indicators.

How can companies increase their behavioural recommendations?
Companies should ask: Are customers moved enough to share their great experiences when they interact with us?

Designing customers’ experiences
Customer experience should be designed. It does not happen without conscious effort and planning. It requires teamwork and reviewing experiences from the outside-in (from the customers’ perspectives). Customer feedback (through various channels) point to or illustrate pain points, expectations, and what contributes to emotional experiences. Ask at each point: What is the desired emotion I want my customers to experience?

Review every touch point, channel and moment in the process and give specific consideration to how the team can create 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.