Linking Customer Loyalty to Growth

o most senior managers, growth is the engine of prosperity and success. Growing companies flourish; shrinking companies die. Good managers understand that the road to growth runs through customers — not just attracting new customers, but holding on to the ones you have, motivating them to spend more and getting them to recommend your prod-ucts and services to the people they know. However, it is one thing to believe that customers are the driving force for profitable growth. It’s altogether different to know how to measure and manage the customer relationship effectively. Using the right customer metrics is essential to assessing and monitoring how companies deliver for customers and determining custom-ers’ new and unmet needs.Most companies do a relatively poor job of managing their relationship with their customers. It isn’t that they don’t care, but rarely do they have any insight-ful information they can act upon to make the relationship more valuable. As a result, understanding how customers perceive the relationship and anticipating what they will do is typically no more reliable than reading tea leaves. In a world where managers are looking to analytics to help clarify their most critical decisions, this presents a challenge: How do managers measure how customers really feel and what they are likely to do? More importantly, what impact can this information have on the business? Most companies lack good information about their customers — for example, most do not have good customer databases and, of those that do, almost none tie customer survey information to customer behavior informa-tion. Therefore, it is not surprising that growth is often so unpredictable, leaving managers scrambling for useful ways to measure their customer relationships so they can predict how customers will behave — and how successful their business will be in the market. In recent years, researchers have advanced a number of customer metrics to illustrate the connections between customer behavior and growth. In the harsh reality of the marketplace, however, these efforts have