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| How to Secure Customer Loyalty? | | | | |
Most of my customers are satisfied. Why should I worry?
For years, research undertaken by academics and private companies showed that high-quality products and services designed to meet customer needs would create high levels of customer satisfaction, and therefore, increase customer loyalty.
However, in-depth satisfaction studies by Xerox Corporation of its office-products customers shattered this conventional wisdom. The firm's totally satisfied customers were six times more likely to repurchase Xerox products in the 18 months following the study than were its satisfied customers. Merely satisfying customers who had the freedom to make choices was not enough to keep them loyal. Xerox found that the only truly loyal customer is the totally satisfied customer.
So, managers should be concerned rather than heartened if the majority of their customers fall into the satisfied category. Merely satisfied customers are ripe targets for competitors because they are easy converts. Some might ask, "Why did these customers say they were satisfied in the first place?" The answer is that, "Regardless of how they feel, customers of companies with reasonably good product or service quality tend to find it difficult to respond negatively to customer-satisfaction surveys."
In markets with intense competition, there is a tremendous difference between the loyalty of satisfied and completely satisfied customers. In his study of the loyalty of retail-banking depositors, John Larson, Vice-president of Opinion Research Corporation in Princeton, New Jersey, found that completely satisfied customers were nearly 42 percent more likely to be loyal than merely satisfied customers.
The British Airways' management team subscribed to W. Edwards Deming's views that merely satisfying customers is not enough to retain their business, and that customer retention is crucial. As Deming put it, "Profit comes from repeat customers -- those that boast about the product or service." British Airways changed its approach to customer relations: championing the customer as opposed to defending the company.
How can I increase customer loyalty?
Follow a three-phase approach to increase customer satisfaction and loyalty.
Steps |
Action |
Step 1 - From dissatisfied to satisfied customer |
Deliver, at competitive prices, basic products or services as expected by anyone in the industry. |
Step 2 - From satisfied to totally satisfied customer |
- Examine your product and service from the customer's perspective to pinpoint and eliminate irritants (making it very easy to do business with you).
- Constantly improve product or service delivery to meet (and even exceed) customer expectation (providing more than yesterday and less than tomorrow).
- Develop proactive service recovery to make amends when something goes wrong and provide customers with feedback of results.
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Step 3 - To maintain total customer satisfaction (highly loyal) |
- Repeat actions from Step 2.
- Be consistent and very dependable.
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Examples
In the last decade, a large number of car dealerships have expanded their services to include overnight and express drop-off, loaner vehicles, and free washing and waxing. Some also have instituted the practice of checking back with customers within 24 hours to make sure the problem was fixed properly. If there is still a problem, fixing it becomes a top priority.
An independent multiplex movie theater in the southwest United States excels in figuring out irritants from the customer's perspective. Its managers discovered that customers' actual movie-going experience started about two blocks from the theater, where the typical customer enters the traffic approaching the parking lot and starts to become anxious about parking and purchasing a ticket. To address such concerns, the theater's managers placed attendants two blocks from the theatre to sell tickets and help people enter the parking lot.
The managers discovered that customers also resented having to leave the viewing area to stand in line in the lobby to buy food. In response, the theater began to serve food throughout the facility; it even served seated customers until the main feature began.
Finally, the managers learned that customers detested dirty bathrooms. In response, the theater began cleaning its bathrooms four times an hour. The end results: a large number of highly satisfied, highly loyal customers.
In the final analysis, the company that will survive and flourish over the long term is the one that continually works to improve its products or service delivery to meet (and even exceed) customer expectations.
Table of Contents
Secure Customer Loyalty?
Maximize the benefits of Customer Feedback and Word of Mouth?
Address the needs of Dissatisfied Customers?
Profit from Customer Service Recovery?
Fulfill an Unconditional Service Guarantee?
Establish a Refund and Exchange Policy?
Adopt a Quality Management Program?
Entire Guide
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