It has become very important to have satisfied customers in these times of intense competition. Every company wants to have as many satisfied customers as possible because companies know the taste of having satisfied customers. As a result, measuring customer satisfaction has become mandatory for companies.
A company would have a satisfied and loyal customer only when the value received by the customer is high enough to make the price, which the customer has paid to purchase the product, negligible. But how to know whether a company has been able to create value for its customers?
A new metric called Customer Gratefulness Index (CGI) measures whether customers is grateful to the company who sold the product or service to them and in turn determines whether value has been delivered and loyalty. It is worthwhile to understand that only when a company has delivered value, a customer would be grateful. Once a customer is truly grateful, he or she has an obligation to fulfill, and they do it by being loyal. Thus, Customer Gratefulness Index (CGI) measures both - the value created by the company for the customer and also loyalty.
Day by day it is becoming important to measure customer loyalty, which comes when the company deliveres adequate value to its customers, but due to lack of proper measurement methods, the measurements are not being done in a proper way. There are some methods available, which do not serve the purpose due to the following drawbacks.
- The methods available that measure customer loyalty does not touch upon the most fundamental human emotion i.e. gratefulness, that automatically comes when one receives something beyond one’s expectations. This leads to inaccurate results.
- Promoting a company or a product comes late in the chain, what comes first and immediate is gratefulness. Relying too much on loyalty and trying to figure out whether a customer is a promoter or detractor, instead of gratefulness, may not lead to correct analysis.
- No good and simple method available that would measure value creation and customer loyalty at the same time. The methods available to measure customer loyalty are quite complicated for companies to analyze and come up with correct results.
- The available loyalty measurement methods are not universally applicable.
- Very little response in surveys using available methods: Since the available methods to measure loyalty are complicated and requires the person taking the survey to apply his or her mind, most customers do not response. This leads to inaccurate results.
Is your customer grateful to you?
Your customer is grateful only when the benefits received from the products you have supplied is so large that the price paid to purchase the products becomes invisible.
Only One Question needs to be asked:
The single question that needs to be asked is “Would you like to thank “ABC Company” for the product or services that you have received” – Yes or No. A dissatisfied Customer would never say yes and a truly satisfied and grateful customer would never say NO.
Just a “Thank you” from the customer is enough to say that the product or service delivered is adding value. This is because the feeling of gratitude is the first and the most fundamental feeling that happens to humans when they receive something that is way more than their expectation. He may or may not promote the company or the product, but the feeling of gratefulness one cannot do away with. These days the expectation of humans is quite high and man is seldom grateful. So, just two words “thank you” in a market that is as competitive as today is enough to determine whether the product is adding value and whether the customer is loyal. Instead of going through other tedious processes like Net Promoter Score (NPS) to measure loyal customers, companies should just try to know whether the customer is ready to thank the company who is providing the product or service and get to know both – whether the company is adding value to the customer and whether the customer is loyal. It is the feeling of gratefulness that leads to customer loyalty. If a customer is grateful, one can be sure that the customer is loyal too because when one is grateful, one has an obligation to fulfill, which leads to loyalty. There is nothing the customer can give back, except being loyal.
The other day, someone returned my wallet, with all my credit cards and ID cards, which I had dropped in the auto rickshaw. I was so grateful to this person. I thanked him so many times. At that point of time, I was ready to give him ten thousand rupees. The feeling of gratefulness was so much within me that even after days passed, I thanked him again and again, of course within myself. Even before I spread the news about the character of this person, I thanked him. Thanking, being more fundamental, came first and then may or may not come promotion. Thanking is easy and it comes automatically without any effort, if one is really grateful. Promotion takes effort. One has to spread the news that this particular company makes great products. A person, who is highly unsatisfied with a product, being angry and would like to give the first negative feedback the company who sold him the product, instead of talking ill about the product to prospective buyers. He would never thank the company no matter what. At the same time, a use who is very satisfied, would like to thank the company first, before he or she starts promoting the product to prospective buyers.
Value Creation and Customer Gratefulness:
One might argue that why should a customer thank a company for its products and services when he or she has paid for it. The product or service was not supplied free of cost. The customer anyway has to pay for it. It is a valid question. From here comes the question of value creation. I would, like many others, define the value received by the customer as the “Benefits enjoyed by the customers above and beyond the purchase price of the product”. A customer would be grateful or say “thank you” only when he or she or a company received something extra, something “above and beyond the purchase price” i.e. when the product or service adds value to the customers.
If the benefits (monetary) enjoyed by the customer is “B” and the Purchase Price is “P” then
Value, V = B-P.
For a customer to receive value, v>P. if V=P, then the customer receives no value above and beyond the purchase price and there is no value addition.
A customer will only thank the company when V>>P. There is a feeling of gratitude when the benefits received from the product or service becomes more ay more important or prominent or visible than the price the customer has paid for the product. When the benefits enjoyed becomes so large that that the price paid by the customer look small and negligible. You know that when the customer is ready to thank the supplier. So a measure of Customer Gratefulness is a sure measure of the value created by the company for the customer. It is needless to mention that when the customer is grateful, there is an obligation to be fulfilled and automatically the customer is loyal, it need not be separately measured.
Customer Gratefulness Index (CGI):
Customer Gratefulness Index or CGI is fraction, expressed in decimals, that indicates the extent to which a group of customers is grateful to a particular company for providing them with a product or service to solve an existing problem of theirs.
Ask your customers one question "Would you like to thank “ABC Company” for the product or services that you have received” – Yes or No. Note the total number of customer who has thanked against the total number who have purchased the product or service on a certain day.
Calculate CGI as follows:
Customer Gratefulness Index (CGI) = (The total number of customers who have thanked the company who has sold them a product or service)/ (Total number of people to whom the product or service was sold). Customer Gratefulness Index (CGI) is the number of customers who have thanked the company, who has sold them a product or service, at a certain time after buying the product against the total number of people who have purchased the same product or service.
The survey can be conducted by surveying people who bought the product or service
- On a certain date
- In a certain month
- In a certain year
The survey can conducted after a certain period after the product was sold depending on the insights required and repeated as and when required in equally spaced intervals. The same set of people may not be considered while doing the repeat surveys. The same exercise may be repeated on different geographies across one or many countries.
If properly analyzed, the results would give excellent insights on customer value creation and customer loyalty.
Since this index is directly proportional to value creation and loyalty, higher the index value, more the value creation and loyalty.
- We get accurate Results as we touch upon the most fundamental and spontaneous emotion – Gratefulness, which happens automatically when one receives something beyond his or her expectations.
- We get better response to surveys because customers need to break their heads try to answer survey questions. This would lead to more accurate results.
- Very simple method – It has one question and an answer which is an alphabet “Y” Or “N”. The survey can be very easily conducted over the cell phone via SMS.
- Easier to analyze results due to simplicity of the method
- Simultaneously gives a quantitative insight on the value created and loyalty
- Universally applicable