I'm still researching the field of service recovery and how it relates to Customer loyalty. Here are some interesting papers I found and have been reading over the past couple of days.. Please also check out the ones I posted a couple of days ago.

Exploring Customer Loyalty Following Service Recovery: The Mediating Effects of Trust and Emotions (PDF)

The Effect of Compensation on Repurchase Intentions in Service Recovery (PDF)

THE SERVICE RECOVERY PARADOX: TRUE BUT OVERRATED? (PDF)

Service recovery’s influence on consumer satisfaction, positive word-of-mouth, and purchase intentions (PDF)

I hope you find them useful.

I have some questions you, hopefully, can help me with:

1. How often do service failures occur, in the eyes of the Customer that is,
2. and how often in the eyes of the company,
3. and to what extend does the link from successful recovery with Customer loyalty still stand when the company is not aware of the service failure and the Customer is successful in recovery nevertheless.. (e.g. with a little help from some friends)..

Thx in advance for letting me know, or pointing someone who might have some answers to me..

Wim

Upon request by @PaulSweeney I decided to put-up a summary of tweets I posted. I guess this will not be a regular activity as in daily or weekly.. Let's say it's more of an accidental effort when it suits me, or upon strong request ;)

At first a "special" on Service Recovery, featuring 4 academic papers and one blog-post by Vovici on the relationship between Service Recovery and Customer Loyalty. Some good insights in there, that go well beyond the "wisdom" about this relationship we hear every day.

#1 How service recovery and the emotions that go with it have an effect on retention http://icio.us/2hTIqf (pdf) #loyalty #custserv

#2: Despite knowing service recovery relates to Customer retention, we still fail.. here's how http://bit.ly/6roayz (pdf) #custserv #loyalty

#3 The relationship quality implications in service recovery http://bit.ly/efZF24 #custserv #loyalty

#4 Service Recovery Paradox: True, but overrated? http://bit.ly/aWFrNj #custserv #loyalty

#5: The effects of customer participation in co-created service recovery http://bit.ly/dI2Ov9 #custserv #loyalty

Furthermore I'd like to ask your attention for the TedMed video linked to in this tweet..

Thinking of how this "notion" can be applied in Customer Experience Management (via @shakingtree @marketingfacts) http://bit.ly/hcYELd

Last, but not least (shameless self-promotion): The telco featuring in my latest post on my wordpress-blog, has been listening and replying to the post. Yo ucan check out what they said (and how) by following the link in this tweet:

Follow-up on Destroying Customer Value: @Telfort is listening..: http://t.co/bwviT5N #scrm #webcare #custserv:

Can you please let me know in the comments, whether this is an effort I should continue with?

Thx for reading!

Wim

Today I found a new Dutch initiative to measure a Company's Customer Performance: The Dutch Customer Performance Index (DCPI) (Dutch only) - a new objective and validated index for measurement of Customer performance - .

This is an initiative of the Customer Insights Center of the University of Groningen (Dutch only), intelligence bureau MIcompany and market researcher MetrixLab. The University of Groningen is responsible for the scientific bases of the research. MIcompany determines wich value companies create for themselves from their Customers and MetricLab is repsonsible for data collection en building the benchmark database.

The DCPI conducts their research on a regular basis for 80 of the largest service providers in The Netherlands, which is based on a research base of 4.000 Dutch consumers.

The DCPI measures and compares these 80 companies based on two perspectives of a company's Customer performance:

• The value a company creates FOR their Customers: Value to the Customer (V2C)
• The value a company creates for themeselves WITH their Customers: Value to the Firm (V2F)

The Value to Customer Dimension

The V2C dimension is based on articles by Rust, Lemon and Zeithaml and Verhoef, Langerak and Donkers and is based on four components, all equal in weight to the total score:

1. Relationship Equity: Valuation by Customers of the relationship with the company.
2. Value Equity: Valuation by Customers of the price-to-value relationship.
3. Brand Equity: Valuation by Customers of the brand
4. Emotions: Valuation by Customers of both positive and negative emotions that can be associated with a company

The Value to Firm Dimension

The V2F dimension is based on articles by Gupta and Zeithaml, Reichheld and Gupta, Lehmann and Stuart and also has 4, equally weighted components:

1. Revenue: Customer spend on a company's service(s)
2. NPS: Net Promotor Score
3. Retention: The likelihood of Customer retention
4. Risk: The risk of future revenue. This one is based on the variation between the three previous components. In short: the higher the variation between the three individual scores, the higher the risk.

My take on this

I like this research for a few reasons:

• It's Dutch.. but that doesn't mean anything to most of you probably ;-)
• It has a scientific/academic base and the research is conducted under the responsability of a respected Dutch University.
• The two dimensions that fit into my "value co-creation" thinking.
• The fact that the Value to Firm dimension does not talk only of financial value and it's not based on one number.
• I particularly like the way the research approaches the Risk of future earnings by bringing it into the equation for starters, but mainly by it being component based on the variation between the three other components. This makes a whole lot of sense to me.

Curious as to what you all think. Is there something similar to this somewhere else in the world? If so, how's that working? Is this the closest we get to measurement of value co-creation on a company to compant comparable level? If not, what are your suggestions for improvement?

Today I found a research paper by T.R. Coltman, from the Australian Faculty of Informatics, University of Wollongong, titled: Why Build a Customer Relationship Capability? (2007)

I find this paper interesting because it comes from a Faculty of Informatics, hence not Marketing, and it puts Customer needs & Market oriëntation in the center of its research (on this topic I think one should btw ;-). The research links the CRM capability to company performance, which is not only measured by financial performance, but also by (sustainable) growth, Customer Satisfaction and competitive positioning.

The research provides academic proof for building a CRM capability. Some of the conclusions are:

1. It is probably NOT true that more relationship building is always better; rather building the right type of relationships is critical.
2. Companies that do NOT have the time, energy or motivation to form deep Customer Relationships are UNLIKELY to gain competitive advantage of a market oriënted strategy; where market oriëntation is explained as focused on meeting Customers' (unmet and/or unarticulated) needs.
3. A Company that can SENSE Customer needs, without depending on direct Customer feedback, may reduce the perils of competition.

Not only does this research show that CRM is far from dead and that it is far from being a technology (said so by an Informatics professor!), it shows that building the right and deep Customer relationships is a critical factor for success if your strategy is to meet Customer (unmet) needs. And who doesn't want that!.

And it shows how important it is to develop the capability to sense future or unmet Customer needs, because Customers are not always able to articulate their needs clearly, let alone needs they do not recognize (yet).

You can download the paper here.

Mitch Lieberman wrote a terrific post today titled "Social Just Is". I highly recommend reading it, not only because it makes sense. One can sense this is a post straight from the heart - of the authentic kind. Mitch also quoted a small part of Graham Hill's latest post "A Manifesto for Social Business". The quote:

From Individual Customers…to Networks of Customers

The emphasis for business today is still on managing customers as individuals. But we have evolved as social animals with highly developed and highly influential social networks. For example, research by Christakis & Fowler suggests that we are highly influenced by three degrees of influence – friends, friends’ friends and friends’ friends’ friends. It’s not about ‘influencers’ per se, but the social networks in which influence happens. If we are to be successful in Social Business we must recognise the power of customers’ social networks to shape customers’ behaviour.

Just a few minutes after I finished reading Mitch's article I read an Harvard Business Publishing article on social networks by Rosabeth Moss Kanter. She makes a very compelling case about the real power in companies and organisations lies with people who know people:

This is why connectors with big networks have so much power.

Please read the article " On Twitter and in the Workplace, It's Power to the Connectors"

What do you think? Does it make sense to try and identify the Connector and not the Influencer? Must we not only recognize the power of social networks but more so the power of Connectors to shape customers's behaviour? (And if so, where do you want to be at Klout ;-)

This is the title of an article I read today. The article is suggesting answering the question with a "Yes - we can!"

Their opinion is based upon the following reserach results, which I quote directly from the article:

In a study of 3,000 social network users, completed with ROI research and released last Wednesday, Performics found that about 30 percent said they had learned about a new product from a social network, and 34 percent used a search engine to find more information after seeing an ad in social media. Another 27 percent said they were open to receiving special offers or promotions from advertisers through social networks.

While Facebook can generate leads efficiently, it's a long way from being a direct-response engine, according to Ben Kunz, director of strategic planning at Mediassociates. He recently ran a cost-per-click campaign on Facebook for a higher-education client targeted to prospects in a 50-mile area that returned 872 clicks from over 2 million impressions, a dismal click rate. The upshot: the whole campaign cost under $300.

For me this is a clear example of the Paradigm Shift not keeping up with the Big Shift. This is how I commented on the post:

I wrote a post on my Wordpress blog yesterday titled: Failure Demand - A starting point for Outcome Driven Collaboration. Of course I was aware, that with writing about Failure Demand, I would show some sympathy towards System Thinking. 

There is a lot of different "Thinkers" around. Some of them also present their way of thinking as the "only right way". The "System Thinkers" I've encountered with seem to be the most dominant in this respect. But it can well be that those are the most vocal. System Thinkers tend to be completely "command & control" averse. I do have many sympathies towards their "relationship between activities" and "costs are in the flow" ideas. Nevertheless I feel they get stuck in their dogma's, which causes a failure to be open to other ways of thinking or building solutions. Most of all I get the feeling that System Thinking is about addressing the problems, but not about building bridges and finding solutions. For one I would be interested in a System Thinking approach towards measurement & metrics to keep track of one’s business performance. I think "they" are reluctant or even "afraid" to provide alternatives for due to the adversity towards "command & control" thinking. I could be mistaking here. So please share your stories to prove me wrong.

Design Thinkers, in my current view, seem to have a more open-minded approach. The ones I know certainly do not have "the solution" in place. What they trust upon is their proven approach towards building solutions. I see lots of value in this approach, as I do in their "Customer outcome driven" mindset. On the other side of the coin I see that Design Thinkers often place so much trust in their approach and are also "creative" minds that they tend to have very loose, if any at all, ties with management and/or academic research. The iterative process prevents them from making big mistakes or ensure them to fail early. Nevertheless I feel it is better to “fail smart” by taking a dive into what has been created before, than to invent the wheel all over again. And yes, this involves some necessary "boring" reading and research, but it’s worth the effort. Again, I could be wrong. So please share your stories too..

To conclude: I do not regard myself a "system thinker", nor a "design thinker" and for that matter not any other thinker too. Not because I think there is no value in these "ways of thinking". Nothing is less true. I just think there is more value for me in combining different kinds of thinking and approaches. I like to regard myself an "independent thinker", who is also passionate about Customers..

What kind of thinker are you?

I think most people agree that capturing the Voice of the Customer, is an important part of Enterprise Feedback Management, but is useless if there are no actionable insights derived from the feedback.

When I think about Voice of the Customer and Enterprise Feedback-management I immediately think about the Measurement Framework too. I can't separate the one from the other.

I'm convinced that a measurement framework is not about KPI's and other kind of performance metrics and measures alone. Metrics and measures, much like Customer feedback alone, do not deliver what you need: actionable insights.

Actionable insights are a result of smart analytics based on a thorough understanding & data-collections of the Customer desired Outcomes, Customer's experiences, your processes, channels, marketing activities etc etc..

I'm not done yet developing a full-rounded view (I ask myself, will I ever ;-) but I would like your views and suggestions on my 1st draft measurement framework, in which I try to visualize what elements I believe are involved in the creation of Actionable Insights

WIm Rampen's Measurement Framework

View more presentations from Wim Rampen

Let me know what you think!