Is ” Customer satisfaction ” an approach from the past ?
In the last several years we all worked to meet or exceed ” customer satisfaction” however, in the last few years we changed our approach to what we call ” Customer Loyalty”.
We believe the difference is the fact that a satisfied customer ” may ” never come back.
We need to strive to not only meet their immediate needs but create a system that will allow them to return.
Whats you take on this ?
October 17th, 2008 at 10:00 am
Customer satisfaction is about understanding their expectations and exceeding them. (Take receiving a complaint; Acting to resolve it in a timely and efficient manner often results in customer satisfaction even if the customer did not get what he or she wanted)
Over the years I have become more convinced (in fact I have discussed this many times with companies) that customers who complain actually want you you to do something, those who don’t complain about a bad service / product just walk away and are unlikely to be seen again.
But customer satisfaction is not a guarantee of customer loyalty. The days of one customer - one brand (I think) have gone.
Customers need to be contacted, you may never hear from a customer between transactions but that does not mean they are satisfied or loyal. So keep in touch.
The ‘lock-in’, such as loyalty cards, only work for a period of time or if the user can actually get a ‘pay-back’ from the card promotions. It is not an indicator of satisfaction it is just a way for the customer to get a pay-back on an investment.
The ‘lock-in’ via auto renewable contracts is a loyalty program of sorts but does not guarantee satisfaction but it does help retention.
Customer satisfaction means different things to different people and so back to my first line -Customer satisfaction is about understanding expectations and exceeding them.
Of course there are standard ‘things’ which promote satisfaction — clean hotel rooms … on time delivery … well presented and product aware (sales) people — it does what it says on the label — you can think of many more.
We cannot expect customer satisfaction as a right we have to work hard to achieve it
October 17th, 2008 at 10:01 am
Customer satisfaction is relatively easy to deliver, just do what they asked of you, exceeding customer expectations can mean delivering what was asked earlier than expected or delivering more than was expected, be careful with this one as they may turn to you and ask why you delivered more as they would have preferred the original spec delivered on-time!
Customer loyalty is a different kettle of fish and whilst the label should be the goal for or all organisations it can come with some side effects. So how do you get there?
Customer loyalty is a time dependant; you wouldn’t expect loyalty from a friend after a week of getting to know one another as you wouldn’t expect the customer to be loyal to you for delivering a single program on time, in this instance you have only set the ground work for loyalty. Customer loyalty however is multi-faceted; the supplier needs to show that they are beset in class over a range of disciplines, market awareness, engineering excellence etc. get to know the personal characters of the management and of course back up your endorsement by delivering what you said you would deliver when you said you would deliver it.
Benefits: you will hopefully be the first to be told about new projects your organization can bid for, you get a deeper understand of what the customer needs and therefore can tailor future projects closer to the customers needs.
Negative: exceeding customer expectations can become more difficult, if you always deliver on time, then this is the norm, you are not doing anything special, so you may find you have to work hardware to impress as time goes on. Like any relationship, the account needs regular attention to ensure that you are not taken for granted.
To create and maintain Customer Loyalty, multiple business functions, and multiple personalities need to be deeply involved in the customer account, Key Account Management is a must to ensure that the relationships stay alive and well.
October 17th, 2008 at 10:02 am
At the end of the day, I think it’s all semantics. What Customer Satisfaction indexes are for is to look at how customers view what they’re getting at the moment, and how that links to behaviours that you will likely see, so that you know where to focus your efforts.
If you want to call that “Customer Loyalty” or “Customer Delight” it’s really all the same thing. You want to measure how customers feel and be able to predict behaviour as a result of that. It’s also important to bear in mind that what you will measure differs depending on the nature of your business - for example, whilst airlines look at repeat bookings, we at Sky would look at Churn - but the end goal is still the same.
October 17th, 2008 at 10:03 am
I would agree with Stephen McCullagh that in the current paradigm it may often be merely a semantic difference.
The thing that scares me is the Kano Model (see good ole wiki - http://en.wikipedia.org/wiki/Kano_model ).
The uggeration of the whole thing is that red line - the top curve. What excited me about my first car is something that I expect as standard nowadays. In fact, some cars with lots of fancy “exciters” still disappoint me because they don’t have the self-setting intermediate wiper-speed thing that my ancient Skoda had! So, if we fail to meet the basics - AND REALISE THAT THIS IS ALWAYS MOVING UPWARDS - then the exciters will actually irritate our customers!
I think QFD (Quality Function Deployment) may have some interesting stuff in it for you. I am not an expert in it, but found some descriptions given at the Deming Forum (UK) this year were very compelling and interesting.
Best wishes,
Emma
October 17th, 2008 at 10:05 am
There are 4 ways to look at customers:
Customer Satisfaction = Customer Retention = Customer Loyalty = Life Time Value of a Customer
It really depends on what and where you are in your business and which aspect you need to concentrate on with your customers.
1. Customer Satisfaction. Obviously all companies strive to keep their customers happy in the products or services they provide. Happy customers typically result in keeping your customers and reducing the number of problems that my arise (reduced support call rates!)
2. If customers are satisfied, or I prefer going for the max which is “customer delight” then churn rates will be reduced.
Both the above scenarios helps organizations in reducing cost (less calls into customer or field service) and maintain a steady stream of revenue such as product maintenance.
3. Customer loyalty takes it one step further. If customers are happy/delighted and they stay with you, now you can see how these customers can help you achieve more by actually supporting or referring new customers to you. This can be in the form of references, referrals, or other supporting marketing demand generation activities. Most industries are incestuous where everybody does know everybody or simply people move around a lot. By having such a relationship you can look at reducing your cost of sale for new customer acquisition. Keep a log of all such customer activities so in return you can compensate these customers for their loyalty (whether in gifts, if accepted, or discounts off future purchases).
4. Lastly, now look at the Customers Life Time Value (LTV), showing how such satisfaction, retention and loyalty can also promote the lifecycle of repeatable purchases thereby not only helping with new customer acquisition (as above) but by understanding purchasing patterns of the customers and those similar, we can now also understand what our future potential revenue will be with these customers that we’ve achieved satisfaction, retention and loyalty. Hopefully resulting in a positive profit return due to less overhead costs from systemic satisfaction issues and retention problems.
The bottom line (ha ha) is really understanding the longer term view of our business performance vs the immediate financial performance metrics and focus on continuously improving the profitability of our customers vs. just looking at the value of the first sale.
There are a lot of books on Customer Loyalty and Customer Life Time Value. Do a quick search on Amazon.
October 20th, 2008 at 8:40 pm
Thank you to all participants !
Your comments and point of view are first class.
Edison Reis
http://www.qualityassurancemanagement.com
November 10th, 2008 at 2:47 pm
I am talking purely from my experience in a high volume manufacturing environment but the point is a relevant one. I have seen satisfied customers leave and place their business with our competitors and dissatisfied customers remain forever loyal. I believe the reason for this is that it is determined by the strength and depth of the relationship.
To quantify this:
I have seen satisfied ‘key’ accounts lost because the Salesman / Account Manager wanted to be the single point of contact with the customer for one reason or another. The problem here is that the relationship between the two organisations is channelled and totally reliant upon that of just two people, invariably our Account Manager and the customers Buyer. If this sours for any reason or the Buyer feels particularly pressed to meet cost targets or one party moves on, loyalty very quickly disappears.
Even when the Account Manager seeks to broaden his/her interface, their priority is to sell and find new customers so they dont have the time and do not posess the skills or the affinity to operate or communicate effectively with staff from elsewhere within the customers organisation. Good ‘Hunters’ are not always going to make good ‘Farmers’!!
In my experience, loyalty exists where the supplier has recognised the value of ‘farming’ an account and actively encourages more points of contact with the customer. By having other functional staff interfacing with like-minded, opposite numbers, e.g. production managers from both organisations, there is potential for a series of bonds to form, some of which will become very strong. Facing similar challenges in their everyday lives, they will empathise with each other, help and advise each other and do ‘favours’ for one another. Eventually loyalty exists at multiple levels, inducing many internal blockers for the customer to overcome if they are considering an alternative supplier.
Rob John
November 11th, 2008 at 10:15 am
-Meeting and exceeding customer expectations will result in loyalty
-Customer might test waters with a different vendor but if your delivery has been strong and you never had the customer complaining, he is bound to come back and then would never leave unless one stops delivering in the manner which bought your customer back.
-Loyalty would be a stage where a customer feels that the vendor is no longer a vendor and takes active interest in understanding, creating and customising the customers need, thats where the relationship builds.
-Let the customer use the word loyalty, we must continue to deliver. Loyalty can sometimes lead to a very casual mode of delivering, which can be dangerous (getting over confident)
-Also while meeting/exceeding customer expectation one must keep the cost factor involved (to some extent atleast), we would not want to keep exceeding and delivering if we arent making the kind of money. Customer loyal or not, he needs to be profitable in the end of the day.
Cheers
Rahul Kalia
November 11th, 2008 at 10:16 am
I agree that customer loyalty is paramount in this economy. Years ago, quality management was all about not only satisfying the customer, but delighting the customer. Well, where does that delight stop? Once you delight the customer, it becomes an expectation. Just miss that delight one time, and your customer becomes disappointed.
Loyalty is more important, because this means you have a customer that will work with you through good times and bad and knows that you have their best interests in mind when doing business with them.
Patricia Trudeau
November 13th, 2008 at 1:07 pm
Turning around the idea of fulfilling expectations, delighters, and loyalty is nice but I see it falls short when we want clients coming back.
You will keep the loyalty of your clients as long as they see in you an offer to their concerns, not their expectations -being their expectations the first interpretation of their needs to solve their concerns.
This is the equivalent of going after the root cause in a process. In this case you look after the observer and his/her distinctions to build your offer.
The hard part in this approach is working with the soft side of the process and, there, people with the competencies and the methodological structure that is required is scarce.
Leopoldo Araujo
November 29th, 2008 at 1:05 am
Hi Patricia,
I agree 101% with your comments !
We have been working to achive customer loyalty and perhaps the most successful examples are in clients where we have a partnership and not a client - supplier relationship. Whenever we create truly a win - win situation is when closer we get to loyalty (from both sides)
Cheers
Edison Reis
http://www.QualityAssuranceManagement.com