All organizations, including state agencies, would like both satisfaction and loyalty of those they serve. But aren’t these two really the same thing? No, they aren’t. Furthermore, they vary in their degree of usefulness.
A good example of an industry with a high customer satisfaction but low loyalty is that of mobile phone operators. Many customers will leave their provider at the drop of a hat if there’s a good, new iPhone or iPad on offer elsewhere, even if their current operator is delivering good service. In contrast, if only one airline provides flights from a certain city, its residents may complain but still remain loyal, due to the lack of an alternative. What can be done to ensure both satisfied and loyal customers?
Definitions and differences
Starting with definitions: customer satisfaction is a self-reported measurement of the extent to which customers are satisfied with the goods purchased or services delivered by an organization. Customer loyalty, on the other hand, is a company-calculated metric of probability, measuring customer re-purchasing behavior.
The definitions point out obvious differences. Customer loyalty is based on an organization’s existing data. It represents a measurable figure, different for every customer, and can be updated frequently. Many of Teleopti customers are loyal − year in, year out.
Customer satisfaction, in contrast, is based on customer-survey responses. Typically only a small percentage of customers respond and the outcome is one figure, which represents the satisfaction of the population as a whole. Customer-satisfaction results are typically updated on a yearly basis. For instance, nine out of ten customers are satisfied with Teleopti, recommending it as a WFM provider. Boasting one the highest figures in the industry, it shows that Teleopti takes care of its customers, delivering high-quality WFM products and consultancy services.
Beyond these obvious differences, there are more important distinctions. The first is temporal. Customer satisfaction is a backwards-looking metric, intimately connected to how a customer feels about his or her last transaction. It’s quick to grow and quick to disappear with poor service or a defective product. What can be done to increase the overall quality of customer service in general? One idea is to promote star agents as role models or colleague agents.
Customer loyalty, on the other hand, is forward-looking and an indicator of future behavior. It’s slow to grow and slow to decline, thus making it more suitable for predicting future behavior. Although customer satisfaction says nothing about future behavior, critical customer satisfaction questions typically include:
- Would you buy from us again?
- Would you recommend us to a friend or colleague?
Quite often, customer-survey responses don’t correlate with future buying behavior. As hard as this may be to believe, decades of academic research show that people often say one thing, yet do another. It doesn’t matter if your business is in the B2C or B2B segment. But this doesn’t mean customer-satisfaction measurements are worthless. You should stay in close contact with your customers to keep on top of mind − by phone or e-mail, using social media or direct marketing channels.
Customer-satisfaction surveys that report negative experiences can serve as a good mechanism for identifying those parts of a company’s offering that need to be improved. Don’t just expect customer-satisfaction measurements to be reliable or useful company-performance metrics. Stay on track, measuring customer satisfaction frequently – annually is too infrequent.
Loyalty measurements, typically updated monthly, are available for every customer. Customers trending towards defection should get a bigger incentive offer in the next e-mail campaign. Loyalty measurements are critical to building individually relevant campaigns, with relevancy raising response rates.
What does your customer-service organization do to follow up on customer satisfaction and loyalty? Share please!