Beyond Revenue: Measuring Success for Customer Relationships
So how do you measure a successful customer relationship or other fuzzy and squishy elements in business?
A while back, I attended a startup pitch day in Dallas, and before the founders presented their companies, there was a panel discussion about what makes a great company and how you measure success. There were lots of different topics and conversations, but what was most interesting to me was a conversation about innovation and how companies measured it. No one on the panel had any measurements for it beyond revenue, and the panel was pretty diverse, including leaders from a defense contractor, an online dating company, a travel company, and other various app and IT companies in Dallas. What was more interesting about their answer was that revenue doesn’t really measure innovation—it’s a measurement for meeting customer needs by selling them a product or service. And all of the panelists acknowledged that. They basically said that they had no way to measure innovation without saying that directly. And that interested me.
Later in the presentation, founders were presenting their startups, reviewing revenue projections. And when it came to communicating customer loyalty or their relationships with customers, they could only cite emails with customer stories about how many items their customers bought. It sounded like Sally Field at the Oscars, “They like me . . . they really like me.”
It was kind of embarrassing to watch, but these founders don’t have a lot of concrete measurements to indicate customer success and demonstrate solid customer relationships except leads and revenue, which are the main measurements of business success today. Customer praise is subjective and helps secure new customers, but it isn't an objective indicator of success, which is why investors and companies don’t take them seriously.
That’s why I think we will sometimes mistakenly consider business relationships to be successful based on revenue generated or through lead count. We’ll review sales pipelines and consider the best salesperson to be the one who is the closer, although that may not be true. We’ll value customers based on repeat sales, service sales, and referrals or success measurements that are related to revenue. But that’s one measurement of success—not the main outcome of business. A relationship between the company and customer is. If we look at this all differently, there may be customers who bring you new business or salespeople who have excellent conversations with prospects to get them to love your company and brand. But we don’t really have a way to measure this and track how it contributes to the bottom line. So, this begs the question, what if we measured success differently, using revenue as one indicator of success rather than the only one?
I had a professor in marketing measurement who said everything could be measured—even people’s emotions and feelings. And she showed us methods and got us to think in new ways to achieve this. You have to determine what you want to prove, identify the types of facts to prove that idea, and determine how to access the right facts to support your view or assertion. And yes, it is all possible for squishy topics too.
So when it comes to measuring the effectiveness of business relationships, I think there are many measurements that you can use to do this and by correlating those values and insights with revenue, you can learn a bunch about your customers regarding what they really want, the conversations they want to have, and the problems that they believe you solve.
Companies that are B Corp Certified do have new criteria to meet regarding building trustworthy, honest, and transparent customer relationships. That’s a great way to start measuring how you build better customer relationships in general.
And there are some other ways you can do this as well. In the book, Revenue or Relationships: Win Both, I mention five methods: engagement, accountability, loyalty, brand and reputation, and PR measurements for relationships. I’ll be covering four today—engagement, accountability, loyalty, and a bit about brand. Brand, reputation, and PR measurements are well established and defined methods that you can access and use to compare with revenue to give you a better story about your company’s customer relationships. I’ll include links to some resources that highlight them in the description.
But let’s discuss the main four I want to cover today starting with engagement.
Engagement. Now this goes beyond social media. Engagement could happen on a website, live chat, or phone. I like to see engagement as representing how many times a customer contacts your company, not just for sales or support, but for information, insights, guidance, and help, as well as how many times a customer uses a product or service. It basically includes all times that a customer contacts a company. And engagement does have a direct relationship to revenue and loyalty.
If customer engagement is high and revenue is low, you have an excellent relationship with your customers, which is great, but you do have a problem which could be either you aren’t communicating to your customers how exactly you solve their problem, or what problem you are solving for them, or how you can help them best.
They aren’t connecting with you for some reason and you can discover why through A/B testing, reviewing social media comments, surveys, and focus groups. By clearly identifying why engagement is high and revenue is low, you can solve this problem, and quickly see an increase in your revenue.
If engagement is low and revenue is high, that tells me that you don’t have a strong relationship with your customers and prospects, which is a type of business risk. Your customers could exit from the customer relationship at any time because they don’t love your company. But you can change that! I’d recommend that you start connecting with customers more to build a relationship. Get customers engaged and active in your company community online or in-person. Get them to share their stories, participate in social media or present at conferences and events. Engaging with your customers will not just help them engage with your company community but build a relationship with your company, which in the end builds loyalty.
Note that social media isn’t required to achieve great engagement with customers. It’s totally possible for companies with no social media or web presence to still have a strong engagement metric because their customers contact them often. Some local take out restaurants or stores come to mind right away. Many hairdressers, nail techs or manicurists, personal trainers and coaches, and salons come to mind. Some companies only get business through word-of-mouth, and this is a strong case for that. Online media is one type of connection. Always remember that there are others and often it is through these other types of connections that you’ll build a better relationship. Social media is a more supportive method. I’m not saying that you can’t build new business through social media. It’s a great introduction tool. But it’s hard to build a new customer relationship through social media alone. At some point it needs to transition offline.
Accountability. Let’s talk about accountability, where a company delivers on explicit and implicit agreements, or to put it more simply, a company does what it says it is going to do. That sounds so simple, but in many ways it isn’t. Companies have their own values as well as product brand values and benefits. Customers may confirm that a company delivers on these values through customer reviews. And if customers repeat key company phrases, that’s a signal that the company’s conversations are successful. The customers remember the company’s values and can repeat them on their own. Your values become their values. And you could actually track and measure this pretty easily in your business today; it’s just pretty time consuming.
The company’s industry may confirm company or product values by awarding recognition to that company or product based on those values. Or a company or product could be certified for exhibiting specific values that are part of their culture.
If a company isn’t accountable and doesn’t keep its word, yet makes amazing revenue, imagine what would happen if a company met its word! And if a company is meeting its word and not making revenue, there may be another factor like brand or engagement that is preventing sales, which leads to loyalty. If a company is accountable but isn’t making sales, that relationship is missing. And relationships are part of the emotional side of business. An emotional element to the company or product’s conversation may be missing to balance the factual side of the company meeting its commitments.
Loyalty. Loyalty is a confusing business. Often, we think loyalty represents a reward program, in which a customer’s repeat purchasing behavior merits them receiving a gift. But is receiving a reward for behavior really loyalty? A behavior that is repeated over time becomes a habit. And that’s what many modern rewards programs do: create habits. This practice isn’t as negative as it sounds; many businesses do this with great benefit. But to understand if your customers are truly loyal to your company and brand, you may want to explore their motivation to continue their habit of purchasing from your company.
To fully understand loyalty, consider cases in which brand loyalty isn’t related to habits or rewards. One example is hair stylists, hairdressers, and barbers. Most people are very attached to the person who cuts and styles their hair. When they find someone they like, typically they won’t make an appointment with anyone else until that person dies or moves out of drivable distance. The stylist could switch salons and their clients will move with them. The salon or shop itself where the individual works doesn’t matter. The individual’s preference is based on the relationship with the stylist or barber personally and the quality of their work.
What about the stylist or barber makes their customers loyal? The clients don’t get rewards or prizes. Often, it’s not convenient to go to a specific stylist or barber. Preference is based on service quality, but the relationship includes more than that. If the relationship were based on service quality and preference only, then someone could go to an equivalent professional within the same salon or barbershop and be just as satisfied with the end result. But that’s often not true.
People continue to go to the same stylist or barber because there is an emotional bond with that person. First, hair is very personal. Anyone can get a haircut, but people want to feel good about what’s on their head. It represents their personality. They want to work with someone who isn’t just talented, but also who understands their personal sense of style and can find a way for their hair to complement that. When we get a bad haircut, we are experiencing what it’s like to visit a stylist or barber who doesn’t understand you as a person.
Second, people share a lot about their personal lives with a stylist or barber. This creates tremendous vulnerability between them both. Sharing intimate personal stories builds bonds between friends. This vulnerability will keep people returning and continue the relationship.
If we transfer this idea to other types of businesses, it is easy to understand why people go out of their way to support a brand or person or company.
True loyalty is based on an emotional bond. You are choosing to work with a specific company or service because you connect with their brand and how they operate. You feel that the brand understands you—who you are, how you think, what you feel. You think the product or service is high-quality. And you are vulnerable with this organization. There is a convenience factor present, but the convenience may lie in a feeling rather than a physical trait, like location. You may admit to the store managers that you are willing to drive across town to get a specific pastry, treat, or coffee drink because it makes you feel “like home.” Or you may admit that you had a bad day and this object or activity makes you feel better. You are willing to share parts of yourself with that company’s experience through marketing or sales activities from social media to email and more to build a relationship. If you get a reward for buying from them, that’s a bonus, but that’s not the motivator. The motivator lies in the relationship, the trust, and an individual’s self-image and identity.
So, what drives brand loyalty? Your connection with a brand and your desire to see that company succeed and its business grow. You believe in its products and its services. You may be critical of the company at times, but mainly that is because you love it so much, you have high expectations. You expect it to be better and to do better. Loyalty isn’t behavior. Loyalty is based on a relationship. True loyalty isn’t built on wanting to promote the business itself; loyalty comes from wanting the business to succeed.
If you want to measure loyalty, discover who reads your content, follows you on social media, buys and uses your products, and writes great reviews. People who love you and have a deep customer connection with you will constantly find a way to interact with your brand. Know who those people are and observe their activities. Find the delta between those who purchase versus those who no longer purchase. What caused the shift? And do those who no longer purchase still serve as a type of brand ambassador?
Customers providing referrals for your business is another sign of loyalty. These people loved the experience with your company so much that they want others to experience the same. Knowing who is referring your business is important because they are unpaid ambassadors for your company. They are the ultimate hybrid between an employee and customer.
A loyalty problem would be identified through poor ratings and reviews, few customer referrals, no followers or fans, and light customer relationships with your company.
If you notice that you aren’t receiving many referrals but sell a lot of products, you may need to better connect with your customers to build a stronger following and customer community. If you have a great following and aren’t making sales, you may be missing that connection to show how you can directly solve their problem and provide value. And the problem you solve may not be related to product quality; it could be due to convenience or personal perception when using the product.You may not be solving the right problem or not communicating it in the right way. It is rare for such a company to have that problem.
Brand and reputation. Brand and reputation are connected yet different. Brand represents how a company or organization communicates who it is and what it does. Reputation represents how a company is perceived by the public, beyond customers and prospects.
Often communications professionals confuse brand and reputation problems because they have an intertwined, cause-and-effect relationship. However, they have very different diagnoses and solutions.
Reputation issues are related to your organization’s public image based on people’s experience of it through products, reviews, analyst opinions, news, the behaviors of employees— everything. In some ways, you could say that a company’s reputation is reflective of how the customer experience is perceived by the public. You can’t control what others think of you or your organization. You can try to influence this perception through your brand, press interviews and releases, messaging, activities, popular employees and executives, customers, or great products and promotions. But in the end, the public will have their own perception of your company and products. Reputation management tends to include PR activities, positioning/messaging strategies and activities, and content strategy.
Although a brand is a factor that determines an organization’s reputation, if a brand is not well communicated and an organization loses control in how it communicates about itself, press about the organization and its leaders will guide people’s perceptions of it. In some ways, their actions should reflect the brand values, but that’s not always true. That’s usually where disconnects between brands and reputations occur.
You brand represents your company’s personality and is traditionally communicated to the public through logos, colors, and messaging in various tactics and channels. In today’s digital companies, customer experiences are also communicating brands. An organization’s values should be included in the interaction design. Brand effectiveness is measured through the impression that marketing materials and communication plan activities leave on people who experience them. Measurements validate that the brand is being communicated as intended.
A gap in your organization’s reputation and brand communication may highlight how individuals in your organization don’t embrace brand values or how activities promote a public perception contrary to the brand. Or there may be an element of the brand that is being subconsciously communicated to the public through unofficial channels because the brand communication is not openly embracing a specific quality or characteristic. Or the customer experience doesn’t represent the brand values, instead communicating a very different message about the company through products or services.
Because brand communication and reputation management are established areas of communication measurement, there are a number of KPIs available to help you measure them. By comparing these values to your revenue numbers and noticing any relationships that occur, you can determine how your brand and reputation are contributing to or detracting from your bottom line.
Conclusion. So, to wrap up, how can you define customer relationship success for your business? Well some questions to ask:
Who are your customers? Are the people who buy from your company more active participants in the early, middle, or late buyer’s journey? What do you notice about the engagement pattern?
How engaged are your customers? Do your customers engage in conversations with you on social media, through sales and support, or other ways? Do they interact with your company, products, and services through the Web site, the store, and events? Do they go to your company first to solve their problem?
How loyal are your customers? Understand how many referrals you get and the motivation for repeat purchases. (Note: Repeat purchases may be a result of a brand commitment made, not based on a relationship.) There may need to be a survey component to this research to fully understand the depth of loyalty and what’s motivating it. You may discover that the true reason for loyalty isn’t a reason your company would like to continue to support.
Do you deliver what you promise to your customers? This is the accountability metric. This may be worth implementing quickly because it’s another metric that could be tracked today. Understand how many people confirm through independent reviews that you deliver on your marketing and sales promises. Or map a metric to awards and third-party reviews.
PR, brand, and reputation are established communication areas that have a number of metrics available to support them. Leverage them as you can.
Is your company on brand in general? Do a quick content analysis of your company’s outbound-facing content and experiences to see if they are aligned with the brand values. This is a great indicator to determine if your customer experiences are on brand or need some adjustment. Are call centers using consistent approaches? How about your website? How about sales? What do you need to do to start gathering this information today? Prioritize which approaches most accurately reflect your brand values. The easiest data to gather is engagement. It may be easier to start there and build metrics for other channels over time after gaining new insights
As you can see, there are a number of ways to determine if a company has great customer relationships beyond revenue. Let me know if you have questions and would like to discuss in greater detail. Much of this you can do on your own. Thank so much and have a great day!