Unfortunately, it seems as if the questions in the majority of customer satisfaction surveys are only aimed at getting a positive response. Perhaps the companies conducting the surveys believe they can get more repeat business by satisfying their customers with glowing customer satisfaction statistics!
To achieve loyalty, CEOs need to implement customer-focused programmes that commit their companies to their clients on more than merely a satisfaction level.
Doug Leather, CEO, Knowledge Factory
US research house Miller-Williams concluded a more realistic survey on customer satisfaction in November 2002. Its research showed that the relationship between customer satisfaction and loyalty varies tremendously between industries. "Most interestingly, in some industries, as satisfaction increases, so does loyalty, while in others [such as the software industry] the opposite is true," notes the report.
That begs the question of what real use customer satisfaction ratings are to a company. All CEOs naturally want to ensure their customers are satisfied with each interaction with the business, but what they really need is to instil and continually reinforce loyalty to the company or brand that will see clients coming back and spending money again and again, irrespective of competitors` efforts to entice them away.
The Miller-Williams survey found that customer satisfaction is an important short-term attribute of an organisation`s customer base, but it does not enhance the long-term value of customers. It is a good first step towards building loyalty, the report states, but there are no guarantees that loyalty will follow.
The reason: satisfaction is short-lived. It is a measure of what people think about a company at a specific time, generally shortly after a transaction has taken place. Loyalty is objective. It reflects the measure of ongoing commitment from the customer and is an indication of future actions the client is likely to take.
For example, I may be completely satisfied with a new personal digital assistant (PDA) I`ve bought and I may wax lyrical about the product to anyone I meet. A satisfied customer any CEO would be proud of.
When I eventually decide to upgrade the device, there are no proprietary barriers forcing me to buy the same brand - a diary and calendar are very transportable. If I find a competing brand offering the same functionality at a better price, I may still decide to change brands even though I`m happy with the old device. A loyal customer would give scant consideration to the other brand simply because of lower pricing.
Engage the customer on a value basis
To achieve loyalty, CEOs need to implement customer-focused programmes that commit their companies to their clients on more than merely a satisfaction level. True loyalty supersedes the touchy-feely issues so common in the instant-everything age and engages the customer on a value basis.
In other words, ensure it would be too painful for the client to leave, not because of any penalties in the contract, but because rebuilding the relationship with a new supplier to an equivalent level would simply be too arduous and costly.
The basis for such a relationship is not to engage customers in surveys asking: "Are we satisfying your needs?" When faced with these types of questions, respondents have to make an effort to provide a negative reply - and most won`t bother. The CEO is then provided with a glowing report on how customers love their company. Later, when sales decline and customers leave, it`s often the customer relationship management solution or call centre staff that get the blame.
As an example, loyalty research house Walker Information Group surveyed customer loyalty at financial services and insurance organisations - entities that place a great emphasis on client service and satisfaction. The report shows that, of 767 executives surveyed, "75% are satisfied with their current financial and insurance services, but only 34% are loyal to their providers".
In other words, there is no reason for them not to consider a better offer, or even simply an attractive offer from a competitor.
To discover what needs to be done to create loyal, long-term customers, questions customers should be asked are: "Where are we falling short?" "What can we do better?" "How can we improve your shopping/purchasing/decision-making process?"
In well-run companies, the answers to these questions often highlight little details customers make a big fuss about. Getting these issues resolved does not - in most cases - require a great investment of time or money, but it delivers great returns in terms of the increased intangible value customers ascribe to the company.
Is there any real difference in comfort, safety or prestige between similarly configured BMW and Mercedes cars? Not really, but ask any BMW or Mercedes fan to swap cars and you`ll hear what loyalty is: it`s about value built from the experience and fruitful relationships. Costs, packaging, tedious surveys that accomplish nothing and pretty salespeople feature at the bottom of the list because they are obtainable from everyone. Loyalty survives periods of immense satisfaction and even breakdown of relationships, because the underlying relationship is not a feel-good experience, but an arrangement that delivers value to all parties involved.
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