One of the reasons companies pay to measure their customers’ satisfaction is because they believe there is a correlation between how people answer their survey questions and their intent of buying more from them. I am not about to challenge that core belief here, even though the science behind it is quite murky. There is a lot of debate in the business and academic communities about the ability of these measurements to predict actual behavior. However, there are relatively few independent studies that provide substantial evidence for either point of view. If you know of any, I would be grateful to know where to find them.
Let’s assume, for the purpose of this conversation, that a positive correlation between customer satisfaction and sales results does exist. It should be relatively easy for a corporate marketing to access sales or units shipped history and trend it against CSAT of NPS® measurements for the same periods. It is much more difficult to do for independent researchers, but publically available market share trends may provide a reasonable proxy in absence of access to sales numbers.
Below is an example of such exercise correlating the market share growth of Windows OS platform (50% and 33% Y2Y) with growth of customer satisfaction/loyalty measured by Social NPS® (278% and 33% respectively). Since most of our work is focused on analysis of online content, customer satisfaction data comes from social media aggregation. Market share data source is IDC reports.
Social NPS® is an algorithmic estimate of customers’ response to the question “On the scale of 0-10, how likely would you recommend this product to a friend or a colleague?” It is produced by applying Opinion Mining technology to online CGC (customer generated content).
Charting the two for other wireless platforms seems to confirm an existence of the correlation. Let me know if you want to see the details.
We have tested the validity of this approach with other product or service categories in the past to discover that there is another important factor that seems to influence the relationship between customer satisfaction and customers action (reflected in company sales).
The sales or market share growth appears to be driven primarily by customer advocacy (i.e. pro-active recommendation or word of mouth), because when customers do not actively share their experiences with other consumers, the previous correlation is not very consistent (below 70%). However, the correlation of Social NPS®, Market Share and Social Engagement trends brings confidence level above 85%.
Social Engagement is the percentage of Customer Generated Content (CGC) found online for a specific brand/product compared to all available CGC for this market segment.
From a behavioral perspective it does make sense – customers who give positive responses to a satisfaction survey likely intend to stay with the company at that moment. That may result in lower customer churn unless their experience changes with time or better alternatives become available. Customers whose experience results in intense enough engagement with a product/brand to actively share their experience in public seem to influence enough consumers to follow their recommendations. That appears to result in a market share increases.
From a business perspective these findings may be used to take another look at your marketing approach and budget allocations. Many marketers focus on clever hooks and discount programs to bring new customers to the detriment of leveraging the existing customer base experience. Perhaps an innovative loyalty program could energize your base to become more engaged with your brand socially.
NPS, Net Promoter, and Net Promoter Score are registered trademarks of Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.