Every company wants more loyal customers. Your organization is no exception. And you’re probably pretty clear about why that’s a goal. When companies say they want more loyal customers, they mean they want customers who give the company a bigger share of their business over a longer period of time.
So far, so good. The trouble is, very few companies understand what customer loyalty actually is, or where it comes from, or how to build it. So while organizations spend a great deal of time and money on efforts to persuade customers to become loyal, those efforts are really just aimed at increasing satisfaction. And satisfaction is all they ever create. Even when the efforts work, achieving satisfaction is the best they can do.
What’s wrong with that? Only this: Sure, a satisfied customer is better for your business than an unsatisfied one, but a satisfied customer will go right on shopping for a better deal—better service, more favorable terms, a lower price. A satisfied customer is only yours until one of your competitors matches you or ups the ante. As you may have noticed, your competitors are always upping the ante.
A customer is not really loyal to you until he or she has stopped shopping for the sort of products or services that you provide. Genuinely loyal customers are those who have gone deaf to your competitors’ appeals and enticements and “limited-time special deals.” Their relationship with you is too valuable for them to consider giving up.
CUSTOMERS AREN’T GENUINELY LOYAL TO YOU UNTIL THEY HAVE STOPPED SHOPPING.
Have you ever felt that way about a company? If so, I’ll bet you can’t name more than one or two examples. The kind of loyalty I’m talking about is that rare. But if you think about those rare examples, and ask yourself why you felt that way, I bet you’ll realize that what earned your loyalty wasn’t really a company at all. It was a person. It might have been a salesperson. I might have been a technician, or a customer-service rep, or even the company’s owner. But it was a person.
People don’t stop shopping because of attachments they form to corporate entities. People only become genuinely loyal to other people. In the business-to-business world, if you have stopped shopping among suppliers of some product or service, I’ll bet anything you like that your favored supplier—the one you have settled on—employs a person (or people) whom you regard not as a vendor but as a business partner. I’ll bet you trust that person to look out for your business interests at least as much as you trust your own coworkers.
Customer satisfaction? Phooey. Here are some sobering facts about customer satisfaction.
- 75% of customers who leave a company for a competitor say they were satisfied or even “very satisfied” with the company they left.
- Only 25% of customers who defect from a company say they left for a lower price—but 50% of company executives think that’s why their customers defect.
- Only 10% of customers leave because their needs have changed. Companies think a full third of their clients leave for that reason.
- 75% of customers actually leave a supplier because of the lack of a solid business relationship. But only 20% tell the company that this is why they’re leaving.
Source: The Sales Board, Inc.
The last point in that chart, about the lack of a solid business relationship, begins to get at the difference between satisfaction and loyalty. I hope I have at least begun to persuade you that the difference is important. If you really want more customers to give you a bigger share of their business over a longer period of time, you need loyalty, not satisfaction.
Now the question becomes: How can you set out, in a systematic and reliable way, to ensure that your company creates more customers who are genuinely loyal? I’m not just suggesting that your sales force should create this loyalty. I’m saying that your entire company might become a sort of loyalty-generating machine.
I’ll have more to say about that in our next issue.
For information about how to make employee training pay huge dividends, contact Action Selling at (800) 232-3485.
Want your company to start creating customers who are genuinely loyal? Check out my latest book, Masters of Loyalty: How to Turn Your Work Force Into a Loyalty Force.