The old “if you get good service you’ll never use a different supplier again” reasoning has some flaws. The link between satisfaction and customer loyalty isn’t as cast in stone as most marketers and their surveyors would like you to think.
If you expect good service, see good service and get good service, it doesn’t mean you’ll be a loyal shopper. It’s easy for companies to get high scores on their customer satisfaction surveys, but difficult for these scores to translate into customer loyalty.
In fact the Harvard Business Review* showed that between 65% and 85% of shoppers who were satisfied with a company’s service, said they were just as satisfied or very satisfied with the previous company too. While it goes without saying that buyers are loyal to companies with good service, you cannot reverse it to mean good service creates customer loyalty. So how do you measure who’s loyal and who’s not? The Sideroad offers some practical advice:
Ask your shoppers if they’re happy with you
Although a satisfaction survey does not test loyalty it can show you how many of your clients are dissatisfied which shows you how many of your clients are clearly not loyal. Also most dissatisfied customers don’t say anything. They just leave. Better ask them if they’re happy before they go.
Account reviews
Your company should be conducting account reviews with your biggest customers. Only 15 to 20 minutes with your current loyal customers four times a year will help you to improve your service. This is not a sales pitching event, so leave the discount flyers in the drawer.
Ask for a reference
If you ask a happy client for a reference and they hesitate, probe a bit further. This really gets clients to open up about their relationship with you. If nothing else, asking for a reference will force unsure clients off the fence.
Offer a memorable experience
This old news, but it works. You’re not the only company offering a product or service to your buyers, so make your company about more than just the product or service. A memorable experience creates loyalty.
Measure wallet retention
This refers to how much money you’re making off of the contracts you’ve managed to keep over the last year. Divide the value of contract clients who have been clients for a year by the total contract value from the previous year. If how much money you make exceeds how many clients you’ve kept, it means your big players are coming back.
By focusing on customer loyalty you really can’t go wrong.
* “Loyalty Based Management”, Harvard Business Review, March-April, 1993, 71.
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