In these days of continuous change, globally linked economies, volatility and uncertainty are the only constants.Customers are closing their purses and opening them only to a favored few. In such conditions, companies need to restrategize themselves on sound customer performance metrics. There are a plethora of measures such as loyalty index, net promoter score, customer loyalty, customer engagement, advocacy, etc., which could lead or mislead the strategy if not carried out properly. In the capital equipment space, where there are long-term relationships between machine tool companies and their customers, it is important to realistically understand and correctly interpret customer perspective measures. Machine tool customers are a demanding group. They have huge expectations and, often, little patience for companies that do not meet them. Even if a company somehow meets their expectations, it does not necessarily mean they will remain satisfied loyal customers. Sometimes customers move because they are curious about a new competitor. Sometimes customers move just because they can.
Loyalty is not an accurate measure Customer loyalty in machine tool buying is difficult to measure. Loyalty is typically gauged indirectly via surveys that capture an intention to recommend or to repurchase. But stated intent and actual behavior can be different. Consequently, loyalty as a business metric is often misleading and in turn, makes loyalty problematic for justifying increased resources and credibility among customer sales and service executives. Customer engagement, on the other hand, is an effective leading indicator of loyalty and profitability. Customer engagement is the extent of a customer’s willingness to invest his or her discretionary time with a company for mutual benefit. It is easier to measure, easier to influence, and more strongly correlated with revenue and profits than loyalty measures. There are two key components of customer engagement – advocacy and involvement. Engagement is measured by activities that build positive connections between a company and its customers, which results in greater involvement that positively impacts revenue. Successful machine tool companies engage with customers in their growth efforts, especially in product innovation, and overall business strategy.
Behavioral analysis Effective engagement activities create emotional attachments that draw customers closer to protect companies from their competitors; encourage repurchasing and promote evangelism. Engagement will become a key metric of business performance in the future. The key characteristics of customer engagement will be intuitive where machine tool customers provide referrals, participate in product and strategy advisory boards, speak at conferences on behalf of the company, and advocate company products. They are clearly more likely to repurchase and increase the company’s share, with reduced price sensitivity. Engagement is a more accurate measure of customer perception and is a leading indicator of loyalty. Loyalty is an emotional state, whereas engagement is actual behavior. Contrastingly, engagement is based on observable behavior. Planning the future together Engaged customers trust your brand, advocate for you, and buy a greater breadth and depth of your machines. They recognize that their strategies and your strategies are aligned.This is the age of engagement, customers are demanding to be heard and involved. Successful companies will continue to grow further as they engage customers in customer acquisition, retention, operations, innovation, and even strategy.