The Gist

  • Cost comparison. Acquiring a new customer, according to some sources, can be up to 25 times costlier than retaining an existing one.
  • Loyalty essentials. Understanding specific loyalty drivers is crucial for CX practitioners.
  • Beyond satisfaction. Extraordinary experiences keep customers loyal and coming back.
  • Data importance. Organizing and analyzing data is crucial for understanding customer loyalty.
  • Cross-collaboration. CX leaders must work effectively with various departments to drive loyalty initiatives.
  • Metrics matter. Identifying and tracking key performance indicators can significantly impact customer loyalty efforts.

The quest for customer loyalty is a priority for most businesses, driven by estimates by some sources that acquiring new customers can cost anywhere from five to 25 times more than retaining existing ones. A prime example of successful loyalty-building is Starbucks, which has consistently led the pack by attentively addressing customer concerns, investing heavily in rewards programs and making data-driven decisions based on the wealth of information these programs generate. By continually measuring customer loyalty and tailoring offerings and rewards to customer preferences, Starbucks has fostered increased loyalty, resulting in long-term business success.

In this discussion, Michelle Morris, a customer experience and business transformation leader at Verizon Connect, examines the critical role of understanding and measuring customer loyalty in today's dynamic business environment. Morris delves into the challenges, distinctions between customer satisfaction and loyalty and the value of cross-departmental collaboration in fostering loyalty.

We caught up with Michelle recently to discuss the topic. 

Editor's note: This transcript has been edited for clarity.

Dom Nicastro: Hello, everyone, and welcome to another edition of CX Decoded. Dom Nicastro here, managing editor of CMSWire and I got another one, I got another CX practitioner, I'm patting myself on the back there. We love having the practitioners from the CX world come in and give us a scoop on what's going on in their world, what's important to them. And today we're going to focus on something that's pretty big: customer loyalty. And the person and the star of the show today is going to be Michelle Morris, a senior manager of business transformation at Verizon Connect. What's going on, Michelle?

Michelle Morris: Hey, Dom, nice to talk with you today.

Dom: Yes, it's so good to connect with you. Thank you so much for your time. Today, we're gonna focus, like we said on customer loyalty. I got a statistic. Now, I can't tell you who I got this from because it came from ChatGPT. So it could have come from my mother. It could have come from Socrates. I don't know. But it says acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing customer. Right off the bat. Is that something that resonates with you in terms of that number in that great disparity?

Michelle: And yeah, who knows about the five to 10? Right? But yes, absolutely. It's cannot cost more money to retain than it would be to acquire a new customer.

Dom: Now, let's establish a little bit more about you, Michelle, you know, tell me about your role.

Michelle: Yeah, absolutely. So I work for Verizon Connect, and Verizon Connect is a part of the broader Verizon brand. Smaller part, we are a telematics company. And essentially, what we do is we help businesses to manage their fleets better.

Loyalty Explained

Dom: Now let's talk about customer loyalty. So the big generic question is, you know, as a CX practitioner, what role does customer loyalty ultimately play for you?

Michelle: Customer Loyalty really defines a lot of our roles as CX practitioners, everything's about that. It's about customer loyalty. So our role is really, to help define it for our business to understand what the drivers are of that loyalty, very specific to each of our businesses. And then to help the business to actually do something about where improvement is needed. Loyalty can come in all kinds of ways, it can be simply in a great customer support experience. And therefore you want to continue to come back, it can come in the form of a product that never has a problem, it could come in the form of an amazing interaction if you're in a service, business and amazing interaction with someone you do business with on a regular basis. So understanding exactly what those experiences are that drive loyalty the most is the key to what we do.

Dom: Yeah, and, you know, we always like to level so even on articles and, we have that little one step back paragraph that says, What is this that we're talking about? And we do that a lot, and they can be good to engage the listeners here to tell them like, what exactly is the definition that a CX practitioner would have of customer loyalty? Because I think some people might hear that, so you know, I get it, I get it, you just want customers to keep paying you every now and again. But is there like a raw definition or some definition that stands out? In your head, Michelle?

Michelle: Yeah, when I think of loyalty, in general, it is a choice to not want to have a relationship with anyone else in that space. So I you know, even outside of the business, relationships, any kind of loyalty to a friend, etc, you know, essentially means I'm sticking with that person. And for businesses, you know, the loyalty I consider is you're at the top level of loyalty. When you decide, you would never want to go and work with another business doesn't matter. They are doing an amazing job and they make you as the consumer, so happy that you don't want to leave. And you know, we can measure that in all kinds of different ways. Obviously, there's some basic satisfaction, types of questions that can be answered or you know, the likelihood to recommend question, but however you measure it within your company. It is really just a matter of understanding that a customer is not going to leave

Measuring Loyalty

Dom: Yeah, speaking of measurement, you know, how would you, as a CX practitioner typically measure this yourself? What are some of those key metrics for you?

Michelle: I definitely measure with Net Promoter Score as using the likelihood to recommend question. But I also have used indexes where there is a group of questions that are answered that help understand various angles of loyalty, whether it's effort or ease of doing business, and the willingness to recommend. So I think that there's a level of even just liking to do business with a company, I think that comes into play as well. So I will say that I'm agnostic in how I choose my loyalty metric, really, I think it just you got to pick one, and then you stay with it, and you use it to guide your business moving forward. It's really not at the end about that end metric. It's more about those things that drive that loyalty that matters. So I try not to get as hung up on the end metric, and focus more on the things underneath it. 

Dom: How do you feel when those debates are happening on LinkedIn every all the CX practitioners get so amped up about NPS versus CSAT versus, and it sounds like to me in your role, it's like that you don't stress out about the actual metric, you’re stressed out about keeping customers loyal, through metrics kinda. Is that am I getting that, right?

Michelle: Yeah, absolutely. Right. So any one of those top level metrics that I just mentioned, might be a great way of measuring it as a lagging indicator, but it's really what are those things underneath it, that you can change in your business, to ultimately change that lagging indicator. So using the leading indicator, if you, if you have an issue with product quality, then get to the bottom of what the product quality is find a way to test your product into a way that's going to be satisfactory for your client, or your customer, and use that as the measure to fix your product quality. And then it will show up as an end result in the surveys around product quality, and around loyalty. So it's kind of more of like what's underneath that loyalty that matters.

Related Article: 3 New(ish) Ways to Think About Customer Loyalty

Presenting Customer Loyalty

Dom: Yeah, and when you're presenting, you know, findings on customer loyalty, and everything is there like that one score, at the end of the day, like, hey, this defines our customer loyalty, this is how it's affecting my world, my business, there's not that one shining number, if you will, like for me, it's like engagement on my article like that's cut and dry. You know, how many people are in there engaging? Is it like that customer loyalty? Or does it go a lot deeper than that?

Michelle: Well, I would never just show only one measure. It's oftentimes what gets talked about in my business. But as a practitioner, I feel like I would be not doing my job well if that was all I did. So it's one number that comes along with a whole lot of other measures that go across the entire journey, as well, as you know, actual comments and feedback and things that customers say, I mean, we all know, emotion drives us to make decisions better, or do our jobs differently. So bringing in that customer's voice, what their sentiment is to the conversation. Absolutely is one of the things that you want to present along with the end numbers.

Dom: Yeah, getting in front of a customer and actually having an actual conversation with the customer. A lot of practitioners have told us it's just so incredibly valuable. Does that exist? Like does the opportunity like that exist? I know, it's so hard, like, because I can't sit here and say, I talk to CMSWire readers every day. Man, would I like to? Yes. Is that a challenge, getting actually in front of customers and hearing those anecdotes, hearing those frustrations outside of the data collection.

Michelle: Yes and no. If your company has a customer support center, you can listen to customer calls all day long and hear it all. But in other parts of the business where it may be like in businesses where you have more of a B2B relationship, and there's a lot of different stakeholders at play, it can be difficult to get all of the voices of the various stakeholders. And so you have to be very intentional at some level of your business about who is talking to those stakeholders and being able to bring that voice back into the business. If for instance, you're in a service type of an industry, you've got folks that are probably looking at the entire service experience. And they're thinking about what actually happens during that experience. So they're out talking to customers at that point. Having just a simple video camera with you or your cell phone is going to capture that and can be brought back and watched. And we do that and we have in various other places that I've worked at, we have that as well. And those are the meaningful parts of, you know, being able to really listen to the customer.

Related Article: Customer Loyalty Programs: Delivering the Most Bang for the Buck

Top Challenges in Customer Loyalty 

Dom: Yeah. What are some of those top of mind challenges that you come across frequently with customer loyalty? I mean, for me, you know, my biggest challenge is trying to be unique, trying to convince people to read our stuff versus someone else's on the same topic, and then trying to write topics that no one else has. So it's a daily struggle to stand out from this crowded world of the web, where our business model lives and breathes. What would be some of the top challenges for you in terms of customer loyalty?

Michelle: It's a great question. I don't think it's a simple answer, right? Your business is certainly different than the business I'm currently in. But ground rules, you have to do the basics, right? You have to make sure everything's operational and working. And those basic needs are met. But beyond that, you know, having a really good vision. And a really good strategy about how you want to be in the market is the key, aligning your organization, then around that vision of what a great customer experience looks like, and what is your unique selling point, that's the key. So being true to who you are, as a brand, and a company will really show up in the market. If you're true to yourself. I think, obviously, there's in the business that you're in, where it is maybe a little bit more crowded market space, you have to find ways to bring it to the attention of new customers, but also for those continual listeners, right? What are you bringing new? What are you bringing to them that they want to continue to come back and listen to? So really understanding what their needs and wants are is always important?

Dom: Michelle, how do you differentiate between customer satisfaction and customer loyalty? Because those seem like they go hand in hand, right? You would think a satisfied customer equals a loyal customer. But I'm guessing that might not always be the case. What do you think?

Michelle: They definitely are similar, right. And a loyal customer is one who is satisfied. But loyalty takes usually a little bit more than just satisfaction, it takes that little bit of something special or extra. When I think about loyalty versus satisfaction, the first thing that comes to my mind is theme parks. And there's that beautiful place in Florida that has multiple different kinds of theme parks, there's definitely a loyalty that comes for many customers with going to one specific park, the other one may be of interest, and you may be satisfied with it. But there's just something extra about that one amusement park that draws you there. So what is it? What is that exactly? That is what our role is, is to find out what that is? Play on it or create it? If that's the case. So loyalty is somewhat like, what do they say, trust, first thing to go. And the last thing that comes back right now, and I think, you know, maintaining a loyalty for a given brand requires the brand to constantly always be investing in that trustworthiness.

Customer Loyalty Evolution

Dom: Yeah. And over the years, you've been a practitioner in CX, you know, for a good period of time, if you were to look back at, say, the first half of your career versus now, are there any major differences, you know, in customer loyalty approaches? Because, again, going back to my example, if I look back at journalism, the first half of my career, it was a lot of the same principles, right. But once the story was out in the print newspaper where I started, you were done. You didn't have to promote it. You just hoped and guessed that people read the thing? And how did you know maybe you got a phone call or two we always used to say. So if one person calls, that means 10 people feel the same way. I don't know why we have that metric. And we never tested it. We never proved it. We just said it. So we said it. It was true. But the point is, you know, looking back at your first half of your career with customer loyalty versus now with digital transformation with AI with all these technologies coming is there a huge difference in the customer loyalty game or not? Or do many of the same principles still apply now?

Michelle: My background is in engineering. So really the first half of my career you know, I did traditional product development engineering. And it's what got me into customer experience in the first place, because I had put so much effort into designing products. And I always wondered, well, do they like, does the customer really even like this thing? I mean, we put a lot of blood sweat and tears into it, right? Do they like it?

Learning Opportunities

And it was in all of the questioning of my leadership that I got to start into this role of figuring out what customer experience is for the company I worked for. And back then, which was, you know, 15 years ago, we were doing surveys by phone, we were paying a lot of money, probably closer to $10 per call, just to get and talk to someone on the phone and get their feedback. So I mean, talk about a difference, right? 

We were moving into online or email based surveys we were looking at, you know, from that point, what are the the way you ask the question, phrasing and such looking even at just the Likert scale, whether we were using the right scales or not. And then of course, Net Promoter Score came around from Fred and, you know, we were able to, really, as an industry kind of think about, well, are we measuring the right things?

 So, from the past to now? I mean, I would say, what we know, today is a lot more about customer loyalty, and about the space. Has it really changed? I'm not sure. I think we just know a lot more about it. Right? I think things that drove loyalty 20 years ago are probably some of the exact same things that drive loyalty today. 

Why is that? Well, people are people, and people are the ones that are making these decisions. And so they are designed to base all of our logic on what's in front of us and the experiences we've had in the past. So I don't know that that's really shifted or changed much. I do think, though, that what we understand about it has, and that makes it such a rewarding profession to be a customer experience practitioner because we get to dig in and learn more about it every single day.

Dom: Yeah, and then your role. You know, obviously, there's other departments and everything like that a person like you has to work with. Does a CX leader like you need to really be good at cross department collaboration, when it comes to customer loyalty. Is there a certain department that needs to be constantly involved in this? Is there a lot of crossover with customer loyalty programs with, say, like marketing, sales, that kind of thing? Do you find yourself as a CX leader having to cross collab in that sense, a lot?

Michelle: Oh, yeah, every day. That's really what our role is, is we are cross functional leaders that have to work things out amongst the entire organization. So yeah, everywhere, from sales, to marketing, to customer support, to operations, to manufacturing, product development, those all come into play for everything that we do. And, and that's sometimes the biggest trick of what we're doing as practitioners with a lot of change we’re change managers, we make the business, try to think about things differently and design things better for the customer. So with that comes having to have the ability to work across the entire organization.

Unlocking Customer Loyalty With Data

Dom: Yeah, we just had a article recently, on CMSWire about combo sales and marketing working together. And I thought that issue was done. Apparently, we still have to figure that one out.

Michelle: I don't think it'll ever be done.

Dom: Who wants the credit for this marketing attribution numbers, and people like to fight over the credit, end of the day, it's what the customer feels, and churn and loyalty, the things you care about a lot as a customer experience practitioner, so hey, we're heading to the end here. And I just wanted to kind of put a big, big ribbon bow on this whole conversation, we covered so much good ground, so much for practitioners to feed on and think about, if there were the one big takeaway with customer loyalty right now, where you're currently focusing as a CX practitioner, one huge takeaway for our audience, would there be something from this conversation you really like them to say, You know what, I experienced this? Think about it, you might want to try it at your org.

Michelle: Yeah, narrowing that down to one thing would be difficult. But the thing that's on my mind these days, is data. It's all about data. And how you organize your data, look at it across different channels of data that come in and try and make sense of it. That's the key. 

We're all sitting on mounds of gold, that tell us just anything we would want to know. So sorting it out to, you know, make heads or tails and drive a strategic decision for the business. That's the trick, right? And so how do you get your head in your organization to organize the data in a way that you can make some intelligence out of it, create those insights, and then use those to drive the business differently? 

Rarely do we have to create new sources or forms to gather that data, it's probably just sitting there. And I think that one way that we've been focusing on it, is to really think not only about those customers perceptions, and what they think, but then tying that together with all of the things that drive those perceptions. And traditionally, those would be things within the leading indicators, like I was mentioning earlier, that would be around your operational data, that will give you some idea, that's the key, how do you get that data and oftentimes, in the business, you know, those significant points don't necessarily exist, and you have to go create a new metric

And yet, that is the trick, and very rewarding when you find it. So that would be kind of the one major thing that I would get at with driving loyalty is finding those right metrics that matter. And then changing them.

Dom: So a follow up question to that would be, you know, is it basically at the time now, where CX people, leaders like yourself getting into young CX folks that want to get into a role like yours? Do they need some kind of data analytics chops? Now, obviously, they need to be able to analyze data, do they actually need to be like, certified these days or take courses in college with data analysis? Is that a smart path? You think?

Michelle: I absolutely think so. Absolutely. And, you know, one course in college that I think is probably the course that I've used the most in my entire career is statistics because data can be very easily mishandled. And yet, we're making really big decisions on data. So how to handle it and create insights out of it definitely is a skill.

Dom: Michelle Morris, thank you for inviting us into your CX practitioner world. It's exactly what we want to do here at CX Decoded. We appreciate it very much. I'm not going to let you off the hook, without telling us where if anywhere, you know, people could possibly follow you, or any thought leadership that you're doing out there, or, or is it more of, hey, let's pick a fight on LinkedIn every once in a while about NPS.

Michelle: Yeah, absolutely. So you can certainly find me on LinkedIn, under Michelle Morris CCXP. I like to keep that CCXP there because I think not everybody is a certified customer experience professional. And so it's important. You can also find me I'll be speaking at a couple events in May. And I'll post those on my LinkedIn page where I'll be speaking so yeah, that's it always, if you've got any questions, certainly find a way to get in touch.

Dom: Sweet. Michelle Morris, thanks once again from the team at CX Decoded. I'm Dom Nicastro, managing editor, signing off for everyone. And once again, thanks, Michelle, for being on the podcast.

Michelle: Thanks, Dom.

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