LOYAL Customer is NOT the Same as Satisfied Customer

Just as most organizations experience turnover in their employee ranks, turnover occurs in your customer base as well. The extent to which both occur has a significant influence on your bottom line.

There is a lot of emphasis these days on creating satisfied customers. But, is having satisfied customers enough?

Customer Loyalty

In our research we found several sources that conducted surveys addressing the impact of customer satisfaction on loyalty to a particular vendor. Depending on the survey source, between 60 and 85 percent of customers who chose a new vendor indicated they were satisfied or very satisfied with their former vendor.

What these results say is that having satisfied customers is not always enough. Certainly the first step in a vendor – customer relationship is working hard to keep customers satisfied. If your customers aren’t satisfied with the experience you deliver, you can rest assured that there will be a high level of turnover within your customer base.

An important transformation needs to take place in the way medical billing professionals view their relationships with customers. The transformation involves moving customers from being satisfied to being loyal. In our book, ANTICIPATE: Knowing What Customers Need Before They Do, my co-author (Bill Thomas) and I stress that it’s important to keep in mind the fact that a satisfied customer isn’t necessarily a loyal customer. Moving a customer from satisfied to loyal requires hard work, consistent attention at all customer “touch points” and diligence in delivering a truly outstanding EXPERIENCE.

Any given customer can be satisfied with multiple suppliers of the same product or service. Does the level of satisfaction factor in? Possibly, but not likely. The more likely scenario that gets played out is that as long as a threshold level of satisfaction is achieved the customer will tend to do business with a company offering the best price. Clearly, price will always be a factor to some extent in terms of which supplier gets the business. But what happens when a supplier is able to differentiate itself in terms of building some degree of customer loyalty? Chances are good that price becomes less of an issue as loyalty increases.

Satisfaction allows you to be in the game, so to speak. Loyalty allows you to continually WIN the game. We look to five attributes to determine how loyal a customer is.

A truly loyal customer…

1) buys certain products/services consistently, if not exclusively, from you

2) tends to be early adapters of new products/services you introduce to the market

3) is less price-sensitive because of the added value they consistently get from you

4) frequently refers or recommends others to you

5) actively promotes/advocates your brand in the broader marketplace

The more of these attributes a given customer displays, the more you should consider them your ‘champions’.

So, how do you build customer loyalty? First, we need to briefly address loyalty as it relates to the product or service itself. Let’s look at what we’ll refer to as a commodity product. A commodity product (or service) is one that looks and functions identically or nearly identically to the competitions’ product or service. In this case, there is little to differentiate on other than price or level of service. In the case of differentiated products or services, the various suppliers can point to subtle or not so subtle differences in the product or service in making their case for buying one over another. If a differentiated product or service clearly has a functional or benefit advantage over those of its competitors, long-term preference can be achieved based on that advantage alone. But, in most cases competition simply upgrades their own product or service to deliver the same functionality or benefit as you so, over the long-haul the level of product/service-specific loyalty diminishes.

We raise the issue of commodity versus differentiated products and services only to point out that in many ways and in most cases, there is really very little sustained product differentiation. The implication then is that we have to build loyalty in other ways.

Here are some things to keep in mind when attempting to build customer loyalty:

  • Let customers know that you are interested in them as a long-term customer. This implies that your people are very much geared to being problem solvers for the customers. They must understand that their jobs exist to solve customers’ problems and to assist the customer on demand.

  • Think in terms of multiple relationships with the customer. This doesn’t mean a seller – buyer relationship. This means attempting to cultivate as many individual relationships as possible at every level of the customer’s organization. While this is often disputed, we firmly subscribe to the notion that people first seek to buy value and secondly, prefer to buy that value from people they like. And they buy from people they can trust. Perhaps the key differentiating variable in the business world today is people. The quality of people you put in front of your customers will clearly help separate you from your competition.

  • Think ‘value”–not products or services. Make every attempt to differentiate your product or service from the competition. Try to stay out in front in making your product or service more functional or beneficial to the customer. The essential ingredient here is value. Does the customer perceive that your product or service is worth more to them than your competitors’ products or services?

  • Engage the customer at extremely high levels. This means that your processes must be efficient, your people who have any impact on customer value (“touch points”) must be highly trained in customer experience skills and you must establish a culture with high expectations for interacting with customers or supporting those who do. Nothing short of outstanding customer engagement can be expected with no exceptions.

  • Think long-term. Your business needs to establish a stable customer base. Companies that have a short-term mentality rarely, if ever, build much customer loyalty. Don’t go for the quick sale just to generate revenue and to move on to the next target. Build a strong relationship with the customer and repeat sales, add-on sales and referral sales will follow.

  • Encourage feedback. Allow customers to provide you feedback easily and whenever they feel they need to do it. Encourage your customers to contact you with ideas, problems, concerns or with a pat on the back that can be passed on to employees for a job well done. Most important, ACT on that feedback!

  • Evolve your culture. Your stakeholders’ economic value is created at the seam where your people and your customers’ people engage each other. Create an environment of high accountability, high performance, high morale and high productivity. Engaged and productive employees will do a lot to build customer loyalty.

In summary, customer loyalty can be accomplished. But it does take hard work and clear management focus. Your organization needs to re-examine every touch point with your customer’s organization and listen closely to what the customer needs from you as their vendor. Then listen between the lines to what the customer isn’t saying so you can ANTICIPATE what they might need next.

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