This blog post looks at the link between repurchase loyalty, satisfaction, and value, noting that it is often easier for clients to state their satisfaction with something tangible, or to describe the value they are receiving, rather than their advocacy. And propose that by measuring the four components of value (service delivery, quality, brand and price model) firms can identify not only client loyalty levels but also the insight required to develop the strategies to retain and grow their clients.
What to measure
It is common to seek a single measure to assess client, company and brand sentiment to predict client acquisition and retention (e.g. intention to repurchase, client satisfaction, client effort scores or the Net Promoter Scores (NPS)).
We sometimes include these measures in clients’ feedback projects; they can be useful indicators and provide a benchmark of the current position with a client. However, we have found that due to the highly nuanced relationships that professional services firms form with their clients, that it needs more than one measure to assess client loyalty effectively.
We observe some firms advocating the use of NPS as a preferred key question because it provides a surrogate gauge of relationship strength, it is popular and simple to use, particularly in web surveys. However, as an article in the International Journal of Market Research highlights because interviews tend to focus upon the opinion of ‘existing’ customers, they are likely to miss negativity from lapsed or non-customers in the measurement, and so overstate the measure.
Additionally, we find that the users of NPS can be at risk of misunderstanding when benchmarking their results against incompatible NPS scores found in public domains – a user may not know the sample base (i.e. who was actually interviewed – was it all clients, a randomly selected sample, or a select group of important clients etc.). This makes NPS comparators potentially confusing and unhelpful.
The challenges of measuring client loyalty
Measuring loyalty of professional service firms’ clients can be challenging, as there can be many external factors limiting a client’s loyalty to a particular firm or lawyer. For example, they could be extremely loyal to one particular partner or practice group, but not to others, or for a particular work type, or not be capable of selecting the firm because of conflicts; consequently, client loyalty is sometimes shared amongst many legal vendors.
A number of published research papers and articles debate the link between customer service, quality, price, image, value, advocacy and customer retention. In 2009, a paper published by Emerald Insight reported that service, quality, image and price model had a significant correlation to client retention. It concludes that each of the four components of value (service, quality, image and price) are directly related to client retention and therefore should be used by service professionals and managers as an important strategy to retain their clients.
What we have found
Our own research has shown that there is also a correlation between expectation management, service delivery, perception of value created, overall satisfaction and client advocacy levels. When supporting firms to measure client loyalty, we prefer to build a loyalty measure using an algorithm to combine elements from these.
The driving forces behind client loyalty
In Putting the Service Profit Chain to Work, the author describes that profitability and growth are driven by client loyalty (retention), that loyalty is driven by client satisfaction, and that value drives customer satisfaction. We have found it useful with firms to help them to try to understand what drives clients to perceive they had received value and to measure this.
We have successfully used a similar measure to assist identify priority areas for intervention, to help firms target their approach and to use it as a risk measurement for their Key Account Management (KAM) programs. The measure plots results from a satisfaction question against a loyalty question to give a square box matrix as shown below and proposes a segmentation to indicate client loyalty.
Figure 1 - Taken from Putting the Service profit chain to work, Heskett et al NB: Acuigen’s preference is to use a 7-point scale in this matrix
An alternative approach
We have sometimes taken a slightly different approach to explain client loyalty and have instead concentrated on the management of brand reputation, using an adaptation of the ServQual model from 1988 as a framework to assess and interpret client opinion, and link the opinion to internal process and marketing.
In addition to aiding questionnaire design, the model is a practical method for attorneys, service teams and account managers to conceptualise and logically explain client opinion and gaps in service delivery.
Figure 2 - Adapted from the ServQual model, Zeithmal, Parasuraman & Berry, 1988
The aim is to create a client touchpoint map, then assess, as far as is practical, the experiences of clients at each of these touchpoints. Gap analysis between perceived service delivery and the service experience takes place and results are put into an action plan to address the gaps.
The research shows that service failure can enhance client loyalty if the appropriate response is managed efficiently and well.
Over the past 25 years Acuigen, when it has been evaluating customer and client opinion, has noted that client satisfaction generally boils down to firms:
Meeting the clients’ objectives/or the expectations that have been set
Doing what firms say they will do
Resourcing work properly with the appropriate skill
Doing the work within the timeframe that was indicated
Delivering work at an agreeable price
Usually, the more frequently and better this is done, the higher the opinion of clients – this builds the brand. When examining willingness to repurchase: service delivery, quality, brand and price model within the context of the market are increasingly relevant.
Continue the discussion
If you’re interested in understanding the process of client feedback to a greater extent or are interested in initiating or scaling up a client feedback programme in your firm, get in touch with our team who will be happy to talk further to assist you and to share our experiences.
1 Net Promoter, Net Promoter Score, and NPS are trademarks of Satmetrix Systems, Inc., Bain & Company, Inc., and Fred Reichheld
2 The NPS and the ACSI: a critique and an alternative metric, International Journal of Market Research, Vol. 53 No. 3, 2011 p.327–346
3 Value, satisfaction, loyalty and retention in professional services, Click here