Linking Customer Loyalty to Growth Harvard Case Solution & Analysis

In recent years, researchers and consultants made a number of customer metrics to explain the link between the behavior of customers and growth. But these efforts have caused more smoke than heat. Despite claims to the contrary, the authors argue that the most popular metrics have shown only slight correlation of growth. None of them seem to be universally effective in all of the competitive environment. Sooner metrics customers tried to explain why people buy. For many companies, it came down to marketing. However, as the authors explain, the issues that affect customer loyalty are complex and go beyond standard marketing. This gave rise to a new category of indicators aimed at understanding the customer. Although managers have learned a lot about the components of service quality (including reliability, responsiveness and empathy), the approach does not indicate the specific managers tons actions. Beginning in the 1990s, many leaders began to pay more attention to customer retention - in particular, an understanding of frustration and satisfaction. But, as the authors note, the relationship between satisfaction, customer behavior and positive financial results have been modest. Today, the most popular metric, Net Promoter Score, focuses on how the client word of mouth - both negative and positive - can advance growth. Development of Bain & Company Inc. consultant Fred Reichheld, it claims the ability to predict the future growth of the customer answers to one question: "How likely is it that you would recommend this company to a friend or colleague?" The authors found that the link between NPS and the subsequent behavior of the customer has been modest at best models based on several variables, plays the models based on the NPP. The authors doubt that there can be one metric that reduces the complex, multifaceted structures in one or two dimensions, but if there is, they write, "there is a good chance that it will ignore one or more important aspects of the equation." "Hide
by Timothy L. Keiningham, Lerzan Aksoy, Bruce Cooil, Tor Wallen Andreassen Source: MIT Sloan Management Review 9 pages. Publication Date: July 1, 2008. Prod. #: SMR287-PDF-ENG

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