Measure, model and manage
Synovate held a one-day workshop on customer loyalty issues. Larry Crosby looks at the role of research.
Whirlpool Corporation is the worlds leading manufacturer and marketer of major home appliances, and currently enjoying record growth. It recognises, however, that past achievements are never enough to drive incremental and sustainable growth, outpace the competition, and deliver shareholder value.
The entire industry is in a stalemate with a cost and commodity focus, modest growth driven by pricing wars, and a lack of customer loyalty to brands. Whirlpool decided to break the stalemate, transforming itself from a product-centric organisation into one focused on brand-centricity and customer loyalty.
For Whirlpool, loyalty is about driving passionate, lifelong relationships with customers by being their most trusted, desired and selected brand a lifelong connection requiring strong emotional ties. Its leadership challenge, if this new strategy was to succeed, was to make the vision come alive for employees and customers alike.
First, it needed more in-depth customer insights to understand the rational and emotional drivers of customer loyalty behaviour. It understood that this was an inherently complex area and subject to a wide variety of interactive causes.
A single measure cannot tell the full story on a topic like customer loyalty. The companys own studies reflected this understanding by using leading edge research and analytic tools to sort through this maze of influences and put valid numbers on the true driving forces.
In tandem with Symmetrics, its customer loyalty business research partner, it has implemented an integrated measurement system. This helps communicate its customer loyalty objectives throughout the organisation, so that employees enjoy a clearer understanding of how what they do affects the customer. This design means that questions can be asked of the data that will give strategic insight to specific management decisions.
Beyond descriptive research, Whirlpool uses causal modelling. Managers want to know more than 52% of customers say it delivers excellent value, or that 43% are loyal. They want information that will help them know where to invest resources so as to move the customer loyalty needle. Causal models, calibrated using survey data, are essential to this process.
Research enables Whirlpool to manage customer loyalty, using it to make decisions and take actions. By identifying and setting priorities through measurement and modelling, it uses these insights in its business planning and resource allocation process. Vital resources are being realigned across all functions to customer loyalty initiatives. And the efforts are paying off with real business results.
It is optimising its customer loyalty investments and seeing the highest return on its strategy in this area by three forms of activity. First, measuring customer loyalty in an integrated and holistic way that recognises the rational and emotional motivations on loyalty. Second, using sophisticated modeling techniques to uncover the cause-and-effect influences that underlie loyalty and deliver business results. Finally, the ensuing information is being used to transform the organisation and the way it does business.
This article was first published in InBrief magazine, March 2005
Copyright © Association for Qualitative Research, 2005