Check out any online community that deals with customer service (and believe me, I’ve checked out my share) and before long you’ll find a posting on “loyalty.” The topics are varied: “Loyalty and Customer Satisfaction;” “Does quality service always equal loyalty?” etc. The desire to understand loyalty is simple: customer loyalty is the “currency” we use to measure our customers’ satisfaction.
What are some of the major factors that impact customer loyalty?
- Exclusivity (“obligatory loyalty”): If a company produces a unique product or is the only service provider in a certain area, the loyalty of their customers is obligatory. This doesn’t mean that they don’t also earntheir customer’s loyalty; it simply means that it’s hard to gauge loyalty simply by looking at the customer base.Example: Several years ago I lived in the mountains, and there was only one wireless service provider for our area. If I wanted to make wireless phone calls from my home, I had to use that company. As it turns out, their customer service was excellent, and when I later moved to the city I continued to use this company, although slightly more expensive than their competitors, because they had always treated me so well.
- Reputation: Some companies have gained the loyalty of their customers due to their reputation. Whether it is the size of the company, their relative market share, how long they have been in business or the number of satisfied customers who have advocated for the company, it’s probably fair to say that most people like to do business with companies that have a good reputation.
Example: Aside from file servers, most of us who use computers in our daily work routines are running those computers on operating systems from one of two major companies. The reasons for this are many-fold and include the ability to obtain timely support, the wide variety of applications supported by these systems, the likelihood these companies will remain in business during our tenure with their products, and our belief that they have too much to lose by not standing by their products. In other words, their depth and breadth of market are positive attributes that make us want to do business with them.
- Inertia: Some businesses achieve the “loyalty” of their customers simply because it becomes too hard for their customers to switch to a competitor.Examples: It’s easier for many people to stick with the same software applications they are used to, even when they know better applications are out there, simply because they fear the learning curve of adopting a new program.
Likewise, a person may not trade in her car for a better vehicle, even one that is safer, gets better gas mileage, is less expensive and whose aesthetics happen to appeal to her more, because of the hassle involved with terminating her current lease.
- Proven track record: Those companies that have “proven” themselves to their customers enjoy the deepest type of loyalty. These are the companies that:
- Have had their products used successfully by many people;
- Provide excellent service in all the departments with whom their customers interact; and
- Stand by their commitment to service when support is needed.
These companies have earned the loyalty of their customers in an important way: they have “lived the promise” they made back when the customer was still a “prospect.” They have shown they can deliver and now customers trust them.
This type of loyalty is the most highly regarded because it tends to have the strongest impact on customer retention. Customers often stick with companies with a proven track record even if they are not the cheapest, offer the most convenience or have the most features in their products. It is also more likely that if something goes wrong, customers of companies with proven track records will be more forgiving of the issue and more patient while a fix is put in place.
Stay tuned for Loyalty: The Currency of Customer Satisfaction — Part 2 and learn how your company can “prove itself” and earn the respect and loyalty of customers.