Loyalty: The Currency of Customer Satisfaction — Part 1

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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.

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