What's influencing customers?

25 November 2011

The modern marketplace has become cluttered with offers and promises. Some of these are valid and succeed in delivering this idea of a differentiated customer experience; yet there are many that fail.

Capturing and understanding how improving a customer’s experience can impact on actual business performance and profit has long been considered the holy grail of customer research. There is a huge amount of interest in customer experience research, but often businesses fail to truly commit to programmes that will deliver true, meaningful data.

A new model for a new market

With a broader, all-encompassing view of the customer experience, ORC International’s new Customer Equity Model (below) extends beyond the standard, drilling down into the finer details that impact the views and mindsets of customers. The model seeks to clarify the influences on buying decisions that ultimately drive acquisition and expansion strategies. It aims to quantify goodwill toward and dependence on a particular brand and is also designed to acknowledge and understand the varying needs of customer segments.

Combining all these factors, the model is able to investigate the most important metric of all – bottom line. It is this key insight that helps organisations quantify the actual value of positive customer experience.

The hotel case study

To validate the model, the global customer research team ran an online survey of travellers visiting a range of midscale hotel chains in the US. In total 2,000 evenly split business and leisure customers were surveyed (400 per brand). The questions focused on loyalty, goodwill, engagement and delivery. By accounting for feelings, beliefs, and tolerance that transcend experience, the model was able to define the drivers of loyalty to a far greater level.

The team found that by supplementing the traditional aspects of engagement and delivery with goodwill and dependence, the explained variance of the model increased by nearly a quarter (24%). This is a sizeable increase in the explanatory value of any key driver model and will have a direct influence on the actions businesses can take to drive customer equity.