From satisfied customers to brand advocates
Decreasing the number of complaints by improving the quality of the products or the services we offer –is what a lot of organizations understand about how to do customer service, in particular, and business, in general. But are satisfied customers sufficient for the company’s long term profitable growth? Or do they need something else?
This article discusses the important relationship between customer satisfaction and customer loyalty and argues that the former should be viewed only as a short term goal, whereas customer loyalty and advocacy should be the strategic objective of all those organizations that want to differentiate themselves and to ensure long term survival on the market. Although the two go hand in hand, the latter should be the ultimate goal of all businesses.
Within the existing literature, there are three main understandings of the relationship between customer satisfaction and customer loyalty. The first one, brought forward by researchers like Anderson, Heskett or Rust and Zahorik states that “satisfaction [is] an antecedent of customer loyalty, which in turn influences the firms’ profitability,” as noted by Guillame Bodet in his work, Customer satisfaction and loyalty in service: Two concepts, four constructs, several relationships.
The second line of thought, whose main promoter was Pierre Chandon, is mainly focused on the individual re-purchasing intention but, as Bodet also concludes, this is restricted to an individual who only has one purchasing option, so its applicability is limited.
The third group, “tended to reveal a weak or insignificant relationship between satisfaction and repurchase behavior,” as explained by the same Bodet.
As stated in above, customer satisfaction should only be an intermediary objective of every organization, whereas triggering a loyal behavior among their customers should be part of their long term / strategic objective.
This assumption is based on the differences that exist between certain attitudes and behaviors of a satisfied customer, versus those of a loyal one. The satisfaction level is, most of the times, related to a certain product, transaction or interaction. As a result, growing the customer’s satisfaction can be an easy to achieve target, but keeping it at high levels is a rather difficult task. The satisfied customers tend to stay with the supplier only until a better alternative makes itself present.
The customers’ loyalty, on the other hand, describes a behavior, not just an attitude. It is significantly more difficult to grow, but it is very slow to decline as well. This behavior translated into several levels of commitment towards the company, each one encompassing its own benefits.
First of all, loyal customers are prone to stay by their favorite organization’s side when the business might not be flourishing. Even more important than that, they will be the ones who will make sure to let others know when things are on the right track in their relationship with the respective organization. The final level of commitment, however, is when they recommend the organization in a proactive manner and out of their own initiative.
This is what we refer to as customer advocacy and it constitutes the basis for sustained profitability and growth, as it allows organizations to predict the behavior and attitudes of their current customers. By being able to do so, they will have an undeniable advantage against those competitors who base their decisions on the changing behavior of a non-loyal pull of customers.
Examples of companies that are recognized world-wide for their loyal customers are: E-bay, Four Seasons, Apple, Amazon, Zappos or Harley Davidson. Fred Reichheld, the author of the “The Ultimate Question 2.0” book argues that Harley Davidson is one of the brands with the highest number of loyal customers, although there are very few research studies that highlight this. This conclusion is based on the fact that Harley Davidson’s logo is the most tattooed logo on people’s body.
Reichheld argues that co-branding their personal reputation is the ultimate way in which one person can show his/her loyalty towards that brand. This obviously says a lot about the buying preferences, attitudes and behaviors of those customers.
To conclude, both maximizing customer satisfaction as well as increasing customer loyalty should be a target for all businesses which are aiming at a long-term profitable growth. The brand loyalty is directly linked to the repeated satisfaction of customers, and can only be achieved by having a performant Customer Service capability that does more than solely minimizing customer complaints; it gives their customers the right reasons for them to become advocates of that organization!
Next Customer Service Performance articles will be addressing strategies, manners, tools and measuring methods that can help organizations reach and sustain the two objectives.
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Tags: Customer Satisfaction, Sales and Customer Service performance
