Survey Responses Provide Reliable Forecast of Customers’ Future Intentions

Xavier Quenaudon
Program Director and Partner
CFI Group

A Legitimate Question

Most Customer Satisfaction surveys include at least one question about customers’ future (re)-purchase intentions – whether it is the renewal of a service or subscription, or a more discrete purchase decision (next time they are in the market for a car, shop for travel, or choose a shopping destination). One question CFI Group consultants often get from their clients is whether they should in fact pay attention to their Customer Retention score (AKA self-declared Retention), which is typically based on results from measures similar to the examples above. After all, they ask, “can you really expect customers to tell you what they intend to do 6 months from now?”

How Can You Find Out?

This is a legitimate skepticism.  One way to dispel it is to compare the survey responses to actual customer behavior for each person who participated to the survey.  Usually it is necessary to wait between six and twelve months before conducting such an analysis, simply because customers need to have been in the situation to make such a decision before their “actual” behavior can be assessed.

CFI Group provides a data file with the survey respondents’ identification (typically, the account or customer number). For each respondent, our client indicates whether or not the respondent is still a customer. CFI Group then appends this new variable to the initial data set, and compares the answer each respondent provided when asked about “their likelihood to renew a subscription” or “likelihood to choose Brand A for their next purchase,” to their actual decision.

In this case, we see that 63% of the survey respondents who had answered a “1” or a “2” as their likelihood to renew their subscription with Company X had actually churned within the next year – or that only 37% of these customers had remained loyal. On the other hand, 84% of those who had answered a “9” or a “10” had renewed their subscription.

Implications for Your Business

The CFI Group has conducted this type of analysis on many occasions for a variety of clients, and the same pattern consistently emerges. Specifically, we have found that over 50% of the respondents who answer anywhere between one (1) and four (4) on the “retention” question during the survey are typically lost within the next 12 months. If any of these respondents turn out to be a customer your organization wants to hold on to, it is important to have systems in place that allow you to identify such at-risk customers and follow-up with them before it is too late.

Such “descriptive” analysis is often only the first step in better understanding not only who are your customers most at risk, but also what is driving them to look for other options. Integrating actual (behavioral) data with survey responses provides a formidable source of information to conduct further analyses that will help your business better understand what motivates your customers to leave or stay with your organization.