Why Customer Loyalty is More Important than Customer Satisfaction

Posted by Emma Rudeck

June 16, 2016

If you ask most business leaders whether they want satisfied customers, chances are they’re going to say ‘yes’. It’s not really a surprise because we know that happy customers are a part of any growing business. When Gartner research tells us that 80% of future revenue will come from just 20% of existing customer, it’s clear to see why business leaders want to satisfy their customer.

We know that customers only share experiences that are special. 

Before, the assumption was that satisfaction was enough. Now, customers demand a lot more before they even consider jumping in with your product or services. Satisfaction has become the baseline for how a customer will feel about your company. In order to rise above that you can’t just do everything right, you need to engage with customers on an emotional level. This means building customer loyalty.

How has customer loyalty changed the way we think about satisfaction?

Loyalty is one of the most important things in customer service.

Originally the idea of creating loyalty was based around organisations making a statement and upholding it i.e. “we do what we say we’re going to do”. This created trust and provided customers with a level of satisfaction, this then moved on to become "we'll do what you want us to do".

But loyalty is changing again. Customers want more from brands and they want the next level. They want companies to say "Yes, we do what you want us to do. But actually we go even further, we fulfil your unexpressed needs too”. It’s about doing things that customers didn’t even know they wanted and doing them brilliantly because it’s simply part of your culture. 

Brands that haven’t moved beyond the origins of loyalty are starting to suffer. They spend on marketing campaigns to reinstate their promise to “do what we say we’re going to do”. But this misses the point. It doesn’t connect with customers emotionally and, compared with brands who are already at that next level, really shows them to be laggards.

How can brands improve customer loyalty?

Loyalty needs understanding. Who are your customers? What are their likes and dislikes? How do they want to do business with you? Admit when you don’t know enough and haven’t asked enough questions. Assuming who your customers are, without speaking to them can be catastrophic. Think HMV and its failure to adapt to modern ways its customers wanted to buy and consume media.

Sometimes you will get it wrong. But be prepared to take risks and experiment. You'll be moving forward in the right direction so we urge you to get on with it and get out there!

It also needs a strong internal foundation. Look after your own people first, so they are completely on board with want you’re trying to achieve.

Michael Heppell uses the phrase “customer satisfaction is worthless and customer loyalty is priceless”. When you think about it makes complete sense. When people are loyal they’ll stay with you forever. Satisfaction is about ticking boxes and a score – it’s not enough to make people stay. 

As a company, if you aim to make a difference to every customer on an individual basis rather than trying to implement huge changes in your service, you will soon find that customers feel more connected to you. By breeding a culture of service that allows your employees to act independently and respond to customers emotionally rather than passively your company will soon experience more active engagement with them.

In short, try and be more receptive and responsive to your clients’ needs and encourage your employees to engage with customers on a one-to-one basis. If your company has a culture which recognises and responds to customers individually, it will connect to them and leave them more than satisfied. It will make them loyal.

To help you get out there experimenting we teamed up with ContactBabel to bring out the latest guide on Customer Effort and Engagement. The guide highlights how we view customer satisfaction and whether CSAT scores are enough. It helps answer the question 'What else can we do to engage our customers?' Grab your copy here:

download guide




Topics: Customer Loyalty, Customer Satisfaction

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