Customer Satisfaction – Why do Companies Care? Part 2
by: Terry Echols
Customer Satisfaction vs. Customer Loyalty
A customer that is “satisfied” has purchased a product which is acceptable to them. A customer that is “loyal” is one whose experience was so exceptional, they will purchase again.
The conventional wisdom for most industries has held that “if you have satisfied customers, you will have loyal customers.”
It may sound correct, but is it?
Saying when the sun is out the sky is clear at first seems to make sense, but it’s not entirely true. Whey you examine the differences between satisfied and loyal, you can see that the two are not alike. For example, how many times have you gone to a store to buy a magazine? You find the expected magazine, pay for it and leave. You’re satisfied, but are you necessarily loyal?
Loyalty usually develops when customers get involved with the company beyond the normal transaction. Strangely, this often takes the form of a problem that is solved in an extraordinary way and forces the customer to recognize the individual care they received. Loyalty also forms when an employee forms a relationship with the customer by providing individual service that elevates the transaction from impersonal to personal.
The common denominator in the development of loyalty is that a relationship is formed. Whether caused by a problem or extraordinary service, loyalty occurs because of proactive employees and management, and seldom because of day-to-day transactions, regardless of customer longevity. So what doest it take to transform satisfied customers into loyal customers?
Contemplate the following...
* What is lost if a customer is only satisfied?
* What is lost if a customer receives poor customer service?
* How much does it cost the company?
Characteristics
Consider the average customer of a dry-cleaning service. The lifetime revenue from one customer could be up to $8,000. However, that $8,000 is far from guaranteed: a single bad experience can stop that streaming revenue instantly. One rude employee can end that lifetime value before it comes anywhere near its true potential. This means one service delivery promise that is broken, and not made right, can mean a loss of $8,000 in future revenue, and that assumes the customer doesn’t tell his friends about the experience.
Whatever a company is selling, its profitability depends on maximizing the lifetime value of its customers, and that value is fully realized only when it earns the customer’s loyalty. A loyal customer is defined as a customer with high return frequency, exceptionally high likelihood to recommend, and exceptionally high overall satisfaction.
The Role of the Employee
Your companies business is creating exceptional customer experiences for their clients. Their clients choose your company because they trust them to take care of them in an extraordinary way.
As a representative of your company, you have a tremendous opportunity to contribute in a positive way, building customer loyalty. Ask yourself, “Can I create a customer experience that keeps customers coming back?”
All too often when employees deal only with other employees, i.e. internal support groups that do not speak directly to paying customers, they forget the person they’re speaking with, at all times, IS their customer.
Next time we’ll address the importance of customer loyalty. Consider this: Does “good” mean “vulnerable”? If so why, if not, why not? Until next time...
About The Author:
Terry Echols is a publisher at http://www.netonesolutions.com aimed at aspiring home based business owner. He has a Bachelors Degree in Information Technology and Master Degree in Business Administration. He hopes to educate his readers on acquiring multiple streams of online income. He also owns http://www.costumersnetwork.com, an online retailer of Halloween Costumes, Makeup and Accessories.
August 2006
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