How Customer Loyalty Data Translates to Customer Experience Elevation


Share on LinkedIn

I ran across an interesting fact sheet about customer loyalty recently provided by customer focus incorporated. The findings represented and aggregate of research and some of it may be familiar to you, as it was to me, but the composite picture is enlightening. I’m sharing a few of the highlights as an impetus to stay the course on elevating personal and meaningful customer experiences. So here’s the data:

Companies routinely lose 50% of their satisfied customers.

The average value of a customer is 10 times their initial purchase.

The cost to attract a new customer is 6 times the cost to save one.

Low service-quality companies average 1% Return-On-Sales and lose 2% market share a year.

High service-quality companies average 12% Return-On-Sales and grow 6% a year.

Only 14% of customers report that they leave a business for product reasons.

68% sever a relationship with a business because they were treated poorly by a staff member.

I have long argued that customer satisfaction is not enough. Satisfaction is the ticket to admission. It means nothing more than the customer thinks you are competent. A satisfied customer leaves you in a position where you are a coupon away from having that customer defect.

For those of you who have difficulty tracking individual customer purchases (convenience store owners, small retail shops) the 10 times initial purchase calculation should provide a reasonable estimate of the annualized loss of each customer who defects. For others, who can track each individual’s purchase history (dry cleaners, hotels, etc), it is important that you use that data to understand segmentation of purchase behavior and explore creating varied customer experiences that match those customer spend patterns.

While we constantly hear about the higher cost of attracting a new customer, how often do we take that fact into account when we are engaging in service recovery or in building incentive programs to retain customers?

Consistently, data is showing that focusing on service elevation is a great return on investment. Have you made the business case in your organization for the likely financial benefits derived from an immediate investment in service excellence?

Finally, customers want to stay with us. They want to remain in the comfort zone of habitual behavior. It is our responsibility to train staff not to drive customers away. Once that mission is accomplished, we can educate staff on how to build customers for life. What are the drivers of defection in your business? What are the “don’t do’s” in customer service? Better yet, if I asked your front-line staff what drives customer’s away would they consistently tell me? If not, you might have some teaching to do.

Republished with author's permission from original post.

Joseph Michelli, Ph.D.
Joseph Michelli, Ph.D., an organizational consultant and the chief experience officer of The Michelli Experience, authored The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company and the best-selling The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here