Endoh’s Dungeon

The funny thing about going back for reservist and IPPT, it’s a love and hate affair. We detest the idea of having to walk into the camp, but yet we love every minute that all of us sat down and catch up with one another. By now, most of us have a job and it’s amazing to watch how life after National Service has transformed each and everyone of us.

Yesterday, I went back to take my IPPT and since most of us scored a Gold, we decided to “AWOL from home” and catch up over coffee. Forget about wives, forget about children, forget about those pet dogs & fishes… it’s an all-boys affair. As usual, we ask about one another and most of the times, we end up with some serious business apart from the dirty jokes. There are comrades who went through divorces, had children, fired from work, bullied by employers and so much more. I’m glad I found a friend in Alex.

Alex was serving in the Navy previously, and perhaps we clicked well because we spoke sea language. He’s a Naval Officer, I’m previously a sea-farer so our little codes like Port 10, Starboard 20, Full Astern, Assume State One Condition Zulu, All action stations close up… No. We meant marketing terms. Our very own unofficial definition of marketing conditions in seaman language. Haha! Amazing.

Alex is now an Assistant Sales Manager with one of the electronics manufacturer. So inevitably we began talking about marketing and sales. There was one very particular issue which we discussed for a long time.

Is there a fool-proof way of measuring customer loyalty?

Many corporations measure customer loyalty by their sales figure. By saying customer loyalty, we meant returning customers. This concept seemed a little flawed to us because in his sales field, coming back to him does not necessarily meant a loyal customer. Other factors like pricing and relationships plays a part in how the entire re-purchase is conducted.

At the same time, extensive research and segmentation efforts have to be implemented before we know how much of these sales figures are generated by returning customers. How many corporations actually do that? New customers also form a significant part of the entire sales chain, that we can’t neglect. If it was easy for the shipping industry to track our players since it’s only a small recognizable pool of the same companies, what about FMCG? We’re talking about the entire population of Singapore, not amounting to the tourists yet. So again, we can’t go along with that absolute trust in presenting sales figures as a statement for customer loyalty benchmark.

In fact, it is hard to even conclusively describe what is customer loyalty because loyalty can come in so many forms. Both verbal and non-verbal.

I think Alex made a very good point when he rebuked one of my suggestions of Word of Mouth promotion by customers themselves, that if WOM is a good benchmark for customer loyalty then it is of little difference from bribery. (I had read about the WOM promotions on Cool Insider’s blog.) The fact to note about most WOMs we see these days, comes with a string of benefits. That is as good as customers being paid to say something nice. However, I do realize this is not always the case… only usually that’s the case.

Within the blogosphere, PayPerPost (PPP) is probably a very good example where bloggers earn from writing something related or nice to attract traffic to the advertiser’s resources. How much does the PPP strategy contributes to their additional sales revenue, that we can’t be sure. At least for now, I haven’t come across a really convincing story of any company that sees a significant rise in revenue out of PPP. So are these bloggers their customers? Hardly, in fact most have never used the products even once.

In most online setup, most of the WOM are firstly spread by immediate friends and contacts. The message wasn’t sent out because the service is good, but because they are friends. Is that another good measurement of customer loyalty through WOM? Alex and I felt, it isn’t any more accurate by presenting sales figures.

Perhaps it is easier for web purchases to track returning customers because all purchases are recorded accordingly to deal with abuse and conflicts. It will be much harder for conventional sales techniques to take accurate measurement of the results of customer loyalty, especially when your customers span from all natures.

Customers profiling (just like criminal profiling) do aid the assessment of returning customers but one question I had in mind, given that many outlets readily hand out membership cards and discount cards, we cannot ignore that some are going to hang on to the cards but failed to conduct any purchases ever again. I am one of them. Yet, this is probably the best method among the few we were touching on. The best but still, not absolute accuracy.

So is there a fool-proof way of measuring customer loyalty? We ended up with no specific conclusions. It came to a point which we agreed that a certain degree of assumptions (sometimes bold and fictional) goes into the final customer retention report.

Now imagine if we could find a way to give precise figures of returning customers, I think that would be a lovely thing to implement into my clients’ events marketing efforts, even though most companies look more towards forging relationships and new prospects than catering to existing customers.