What is the effect of customer satisfaction and trust on customer commitment?

In my last writeup, I talked briefly about measuring customer satisfaction. It was a super simplistic view of a much bigger topic and as such it started quite a bit of feedback from my network of friends who generously contributed to the discussion. From Olaf (whose work on customer loyalty I like immensely) to my friends who asked how exactly could a larger organisation like Walmart rate their vendors (Coincidently, I talked about exact same topic last year at HR Tech San Francisco with one of their Data & Technology teams for HR — which is an interesting topic but for a different time). One of the key topics that came up was customer commitment specifically how to measure it. Obviously, customer commitment is a very important concept. If our customers are committed to us, meaning that their loyalty to us goes beyond our immediate performance, then we would be a really good position. On this note, a few days ago, I had a chat with my brother regarding customers’ commitment to Tesla where despite missing delivery dates, customers are still loyal to the brand or in other words, committed. I can say exactly the same for our business, eKomi too. In the last years, we have managed to create one of the most powerful customer feedback platform and as a result won the largest of the global deals but it could not have been possible without the continued commitment of our clients. In fact, I think we built our entire success on the shoulders of our amazing customers — to name a few, the AXA team in Germany and global marketing teams. I think, committed customers are probably the single biggest competitive edge that a company can have. So in my view, actually the commitment is other way around. It’s not really the customer commitment to us but rather our commitment to the customer that is actually more important. The fact, that we are willing to go not just one extra mile, but lots of extra miles for our customers, is what really determines the commitment from the customers towards us. The customer support success stories from Zappos and other brands are clear examples of this. So regardless of whether we are talking about B2C or B2B businesses, the model is essentially the same.

In my view, customer commitment essentially comes from four key elements:

1. Customer satisfaction: this goes without saying. For a customer to be committed, she must first be satisfied.
2. Trust: even though a customer may be satisfied, if she doesn’t have the trust, she will never be committed.
3. Strength of the relationship: even though the customer may be highly satisfied, and have a high trust, if she doesn’t have a strong relationship, the commitment is unlikely to be there.
4. Earned value: Normally earned value, is considered part of satisfaction. However, I think value that customers earn from a service or product. On this note, I remember a few years ago, HBR published an article on the element of value, that extended the “Maslow’s hierarchy of needs” to create a fundamental elements of value.

Without going into too much detail (I’ll do that in the next writeup) of the above model (as I want to keep my thoughts short — there is always so much to talk about on the topics one is passionate about :)), there is a direct effect of all these four elements on customer commitment. Organisations can objectively measure their customer commitment scores as a combination of satisfaction * trust * relationship score * earned value

Getting a satisfaction score is the easiest bit — any metric like NPS, CSAT etc can be used.

Trust is a little bit trickier. There is a best seller by Stephen Covey, The Speed of Trust, and talks in detail about importance of trust and how it basically covers all relationships and has a direct impact on businesses and persons. However, how does one measure what’s the current trust factor? I’ve researched quite a bit on it, and so far I’ve not found a single objective way to measure it. However, my current view is that in b2b environments, business can get feedback on pre-/post- transactions, brand promise and pricing fairness to get an objective trust score (again I will write in much detail later). For example, for a new client we sign up, or an existing client, we always make certain commitments. We can simply ask the client, what’s their perception on how likely are we to meet our promises and use that as a trust factor. Of course, this is very 0 and 1 approach and trust goes beyond 0s and 1s, but that leads us to the third point.

Relationship strength, which in my opinion is one of the most important and the hardest elements of a business transaction. Building a strong relationship, is easier on individuals level but for organisations-to-organisations, this can be super hard. A lot of times, we can see that individuals have relationships and they take their relationships when they move companies. The only way for an organisation to ensure a strong relationship with customer (especially in a b2b environment) is to have multi-point relationship in both organisations. The more the touch points, the stronger the relationships and overall stronger the relationship strength. I like to measure it simply as number of people having the relationship which should always be more than 1. This is also something organisations can actually use when they do downsizing. To evaluate the impact, they can see all their customers and see what their relationship strength is, and if down sizing makes the score ≤ 1, then they should plan properly.

Finally, the obvious value earned from the product or service. This is frequently miscalculated as well. We, at eKomi, actually try to measure it continuously. To that extent, we even have a calculator which we constantly optimise to see what value we bring to the customers, as can be seen below, using eKomi, in this case for an eCommerce shop, has a net positive ROI. This also gives us an indication on what performance levels we need to maintain.

In short, measuring the four score continuously, and adding customer commitment (and not just NPS etc) to core KPIs, can be quite profitable for the organisations.