The Satisfaction Dilemma


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By: Steve Newman

Customer retention is paramount given the economic down-turn. The challenge has been and continues to be how to drive loyal behaviors. Companies have struggled with this as customer satisfaction has failed to translate into the levels of customer loyalty and share of wallet organizations have expected or required. Why?

The Solution

The answer is that customer satisfaction (or even recommend intention) is only part of the loyalty equation. The situation is analogous to trying to finish a crossword puzzle without all the clues. You might be able to guess at the answers and finish the puzzle, but it is not likely to be entirely correct.

The same is true when measuring relationships. Relationships are multi-dimensional, and one can’t effectively assess a relationship by only measuring how one is doing from a functional perspective i.e., satisfaction. When you think about whether a person is a friend and someone you trust, you not only assess the relationship from a functional perspective, but also in terms of how much of personal relationship you have with that person. This is a universal concept; it applies to all relationships including those between businesses and consumers, employees and other businesses. A company needs to understand how much of a personal relationship it has with the customer if it is to obtain a true sense of the health of the relationship.

Strong relationships are reciprocal in nature and develop from having numerous, positive interactions in which everyone derives value. For a person to feel good about their relationship, that person not only has to be happy with the value they receive but feel the other party is also appreciative. In the business to customer environment that translates into customers believing a company cares about them. When this happens, a bond forms for the customer that is based on trust. Over time, customers become ‘invested’ with this company and when relevant situations arise; they will primarily (if not exclusively) choose this company for their needs.

Relationship Investment is defined as an enduring desire to maintain a relationship. Over time and across industries, fully invested relationships have proven to be a significantly better indicator of profitable, customer behavior. Invested customers are not simply more loyal in terms of retention; they also behave in other profitable ways. Relationship Investment indicates likelihood to spend more, try new products, forgive brand failure and overcome market and situational obstacles to purchase a company’s products.

One cannot expect to have little or no customer interaction during the life-cycle of the relationship, and to then be rewarded with their “investment” and future loyalty. They may be satisfied, because there weren’t any issues. But if you’ve done little to build the relationship, it will be difficult to win their loyalty. Therefore, to create invested customer relationships, a strategy is required that involves engaging the customer and maintaining that positive engagement through the life of the relationship.

Republished with author's permission from original post.

Kevin Schulman
Twelve plus yrs of market research and analytics applied to customer acquisition, retention and consumer equity.


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