Are your customers loyal or simply satisfied?

What is the difference between customer loyalty and customer satisfaction?

“Customer Loyalty” can be described as the tendency of a customer to choose one business or product over another for a particular need. What word stands out in that sentence most?

It should be the word “choose”. In any type of industry, loyalty is based on action not just on the opinion or satisfaction level of your consumer.

Customers may express extremely high satisfaction levels with a company in a survey, but satisfaction does not equal loyalty. Loyalty is demonstrated by the actions of the customer; customers can be very satisfied and still not be loyal.

For example Jane Doe just raves about how wonderful your latest widget is; she gives you 5 stars and a testimonial. Great news right?

Well now your competitor has released a new widget and is selling it for $10.00 less.

The loyal Jane Doe loves you so much, and in turn your product, that she simply deletes your competitors advertisement and returns to you again and again.

The satisfied Jane Doe likes your product just fine, but this is cheaper and it says it’s just as good. Hmm, maybe she will try it out and see what she likes best.

Here is how Wikipedia lists the advantages of Long Term/Loyal Customer:

• The cost of acquisition occurs only at the beginning of a relationship: the longer the relationship, the lower the amortized cost.
• Account maintenance costs decline as a percentage of total costs (or as a percentage of revenue).
• Long term customers tend to be less inclined to switch and also tend to be less price sensitive. This can result in stable unit sales volume and increases in dollar-sales volume.
• Long term customers may initiate free word of mouth promotions and referrals.

Long term customers are more likely to purchase ancillary products and high-margin supplemental products.

Long term customers tend to be satisfied with their relationship with the company and are less likely to switch to competitors, making market entry or competitors' market share gains difficult.

Regular customers tend to be less expensive to service because they are familiar with the processes involved, require less "education," and are consistent in their order placement.

Increased customer retention and loyalty makes the employees' jobs easier and more satisfying. In turn, happy employees feed back into higher customer satisfaction in a virtuous circle.

Whether you use CRM, Database Marketing, Permission Marketing or any of the other various forms out there, what you eventually are trying to drill down to is: How do I increase my customer loyalty? How do I get customers to choose to buy or visit more?

Customer loyalty is the end result, not the method used. You want increased customer retention and, in turn, an increase in the Life Time Value of that consumer.

In order to build this loyalty in your consumer, you must have extremely well-managed customer retention programs. No matter what your field or niche is, all customer retention programs rely on communicating with customers.

With these communications you are giving them encouragement to remain active and choose to continue to do business with a company; customers who are targeted by retention programs generally demonstrate a greater loyalty to your business or service.

What do you want?

Action! You want them to visit your website, make a purchase and/or sign up for a newsletter. Once they do it for the first time, you want them to keep doing it, especially since you probably paid out big bucks to get them to do business with you in the first place. What you don’t want is to have to payout a second time.You want to create a "loyal" customer who demonstrates profitable behavior.

You need to constantly engage your customers in a mutually beneficial relationship. If you barrage your consumers with “junk”, just to have your name appear in their inbox, you are wasting your time and theirs. You will have alienated your consumer and it will be too late to do anything about it, because they're already gone.

You can waste a vast amount of money trying to get them back or simply let them go and move on to finding the next customer and hope you can create a loyalty with them.

How much money do you spend cultivating your customers? First they are a lead, next “prospects”, and finally, finally a customer. YAY! Mission accomplished right?

Not so fast…now you have to hold onto them. You have to develop a way to identify high loyalty customers who are at risk, and take action before they leave you.

Once you have identified that, you simply repeat the process again and again.

How loyal are your customers???

- Meredith

customer loyalty, customer service tips for online business, internet business, tips for good customer service

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