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Satisfaction doesn't equal loyalty

Author Joe Espana
#1 | Posted: 5 Oct 2006 06:37 
In the article entitled "The Power of Highly Satisfied Customers", T.J. Schier points out the economic benefits of highly satisfied customers.

This is great in so far as it goes. Over the lifetime of an average highly satisfied customer they are more likely to spend more money with you than someone who is merely satisfied. The trouble is two fold however: Customers can be really fickle and understanding what makes they satisfied one day can differ greatly from what might make them extatic another; research studies into satisfaction measures have shown that just because a customer says they are satisfied, that doesn't guarantee that they will return.

The problem for servuice providers, dear friends, gets even more complicated, because while we all know its approaximately nine times more expensive to acquire new customers in marketing, advertising, promotional and other 'sales' activities, profitability goes up and operating costs as a percentage of customer spend goes down when when we are able to switch them from highly satisfied to truely loyal customers.

Whats the difference you are asking. The difference is not a simple question of semantics, but of perceived psychological value. The definition of loyalty that companies who are serious about building profits and growth from loyal customers use is one based on three elements: They have high degrees of satisfaction with the service; they would be willing to re-purchase and other things fromthe service provider; and most telling, they would be willing to recommend to colleagues, friends and family. Its only then that a highly stified customer (meeting all the criterion of loyalty) becomes a major contributor to company profits and growth.

How easy is it to develop customer loyalty? Thats the subject of another forum debate.

Author toddchansen
#2 | Posted: 10 Oct 2006 10:30 
We've always researched our clients from the customer's point of view and found that the main driver behind customer satisfaction is consistency of service. This consistency then develops loyalty to a product or service. It's consistency that needs to be hammered home. With out it, customers will look elsewhere. You won't drive a car if it doesn't start all the time, unless you have to. Likewise, you wont use a product or service if the support system behind it is bothersome or rude.

Author sameera
#3 | Posted: 30 Oct 2006 20:14 
In developing country as indonesia. Price of the product or service higly influence the customers decision making process. Once they found another cheaper price they will shift to competitor. They forget about loyalty. Even you try hard to give them the best service you can do.

Author Joe Espana
#4 | Posted: 4 Nov 2006 09:20 
I really appreciated both Todd's and Sameera's contributions. When reading them a couple of thoughts came to mind. All the research and case study materials on this subject contunually affirms that 'consistency' and of course reliability do drive satisfaction levels in customers. Unfortunately satisfaction is not a great measure of loyalty. We know this because across a range of business sectors and industries, customers can be scoring high levels of satisfaction and still leave you for the competition. This being the case, the question arises again and again, what exactly drives true loyalty? By the way, simply to measure how loyal a customer says he/she is is not a reliable measur eof actual behaviour.
Price is definitely a driver of customer selection. However, assuming that the price/value perceptions between two equal products of services are more or less the same, price alone does not influence customer selection enough to be said as a determining factor. The evidence across international studies are extremely persuasive.

Author KarenSB
#5 | Posted: 4 Nov 2006 14:39 
I think a variety of factors drive loyalty, and sometimes the selling/providing organization has little or nothing to do with the loyalty received. Brand loyalty is a prime example: "My mother always used _____ and now I do, too." A personal example is that I grew up eating one particular brand of peanut butter. I've never considered trying any other kind. I don't know if there is another brand that is superior to the one that I purchase, and I really don't care to find out. I'm very happy with my mother's choice, thus it will always be my choice, too.

In the Customer Service sector, I have always found that how we approach, handle and settle disputes drives loyalty. I can purchase a set of tires anywhere, but if there is a problem, how that gets resolved and how the organization makes me feel about the transaction will result in either my loyalty or my telling everyone I know how unhappy I am.

Further, once an organization has gained my loyalty, pricing rarely becomes a factor for me. I am very willing to pay more for a product or service knowing that if I have an issue with it the organization will treat me professionally and respectfully and fairly.

Then there is the loyalty that can come out of one-on-one relationships. This type of loyalty is a bit more rare, but it does exist. I've worked for an organization where I have settled a dispute that resulted in the customer becoming a raving fan. Upon going to a different organization that offered a different product and service, that customer came along because of our established relationship. They felt that they could trust me and my choices.

Integrity and trust also drive loyalty. Mel Gibson is a great example. When he let his integrity slip, he quickly lost a huge share of his public's support and trust.

I believe that except for the loyalty of "this is what I've always purchased," bottom line is that loyalty is driven by the human factor. How we act and react, how we value and treat others, how we impact people...that's the real key. And because we can't be all things to all people, it becomes impossible to adequately and accurately measure. The human element is very intangible, very finicky. What works one day with one person may absolutely backfire with someone else.

So when it comes to delivering service and garnering loyalty, the Customer Service Manager must be a good judge of character, and have the right people in the right position. Our staff are the key to the success of the organization, and we need to develop and nurture them, and ensure that they have the tools they need to be as effective as possible.

Thanks for letting me share.

Author KarenSB
#6 | Posted: 5 Nov 2006 07:09 
PS - Just to clarify...by no means do I believe this is an all-inclusive list! Just top of head.


Author Joe Espana
#7 | Posted: 5 Nov 2006 10:48 
What a terrific contribution from Karen! I particularly liked the PS. Of course it was "top of head", intuitive, gut feel, based on previous experience and how the service provider made you feel. You said more eloquently precisely what I was driving at. When one strips away, price, features, product quality etc, its how the thing / service made you feel that counts and how yourespond to that feeling. Therefore customer loyalty (from where the bulk of profits and growth will come) must to a large degree come from the customer experience as a total package - not simply from measures of whether you liked it on not. Of course disliking it - the product or service - immediately undermines any possibility of customer loyalty.

Thank you all for your fabulous contributions.

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 Satisfaction doesn't equal loyalty

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