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Archive for June, 2010

In my last post, I discussed the difference between satisfaction and loyalty. I alluded to a method that would allow operators to predict the future behavior of their customers by understanding satisfaction factors and their influence on causing customers to behave loyally.

At NGF, we have developed this method. Introducing the…

NGF Customer Satisfaction Index (NGFCSI)

The NGFCSI is a proprietary formula that links satisfaction with the economic value of a customer. Customer value is determined through a unique customer score for every golfer ranging from 0 to 100 (0 the worst, 100 the best). The customer value is determined through the amount of course rounds that the customer plays, the word of mouth referral value of a customer (both good and bad) and the likelihood that the customer will be retained a year from now.

Simply put, the NGFCSI tells golf operators not only how the course has treated the customer in the past, but how the customer will treat the course in the future. As the NGFCSI increases, the customer asset value of the course will grow. Through preliminary benchmarks, we have determined that for every 5 point increase in NGFCSI, a course will grow their customer value by an average of an additional $60 (assuming a $50 spend per round) per customer, through increased play and better word of mouth referrals. For a facility with 3,000 customers this translates to a growth of the customer asset of $180,000!

Through the NGFCSI, we have grouped golfers into one of five categories.

  • Super Advocates
  • Satisfieds
  • Apathetics
  • Hostiles
  • Assassins

The NGFCSI precisely predicts profitability through science. An operator that increases their NGFCSI score will financially benefit through increased rounds, improved word of mouth and reduced churn of existing customers.

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The Beatles were onto something with the song “Can’t Buy Me Love.” What they missed in the song was that you also can’t buy loyalty. True customer loyalty can’t be bought or bribed.

Customer loyalty is the purchase behavior of a customer. It’s the frequency with which they repurchase, it’s the new business that they deliver through word of mouth referrals and it’s the total that they spend over their lifetime as a consumer.

When it comes to the behavior of loyal customers, there are no short cuts. Having a “loyalty program” or a discount card won’t in itself cause customers to behave loyally. The only way of impacting purchase behavior is by improving total customer satisfaction.

There is a strong link between purchase behavior and customer satisfaction. Satisfied customers deliver a higher wallet share, make more positive referrals, and are more likely to be retained.

To truly influence the behavior of consumers, businesses must first understand how satisfied their customers are. Satisfaction depends on the customer’s perspective and the context of the business. As a result it will vary from customer to customer and cannot be directly measured. There are a set of factors that influence customer satisfaction such as:

  • Overall satisfaction
  • Satisfaction relative to expectations – expectations will be very different at Pebble Beach versus a 9 hole executive 
  • Satisfaction relative to your ideal golf course – golfers may have a different perception of what an ideal course is to them, maybe it’s Pebble Beach, or maybe it’s a course that they can play 18 holes in 3 hours

After understanding how customers perceive your course on these subjective satisfaction factors, the next step is understanding which of these factors have a greater influence on causing customers to behave loyally.

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