customers—a sure sign of your company’s success? Actually not, as Xerox Corporation discovered. Its merely satisfied customers were six times less likely to buy again from Xerox than its totally satisfied customers.
What explains this? And how can companies ensure true customer loyalty—that single most important driver of long-term financial performance?
There’s a tremendous difference in loyalty between merely and totally satisfied customers. Whether in highly competitive markets (e.g., cars), virtual monopolies (e.g., local phone service), or industries with strong loyalty-promotion programs (e.g., airlines), customers will stray the instant they’re no longer completely satisfied—and have a choice.
Yes, totally satisfying customers requires some investment and ingenuity—but it pays for itself many times over. Here’s how to keep your best—i.e., most profitable—customers delighted and devoted.
The Idea in Practice
To secure your best customers’ loyalty, take these steps:
1. Clearly define your target customers, i.e., those you can serve best and most profitably. Be willing to let chronically unhappy customers go—they’re an expensive drain on corporate resources and aren’t likely to feel satisfied, no matter what you do.
2. Measure customer satisfaction systematically by ensuring that the process:
• is unbiased, i.e., not distorted by interest groups within your company,
• lets you compare products, locations, and business units,
• lets you capture and store information on individual customers, so you can tailor improvements to their needs.
3. Use a variety of measurement methods, including:
• customer surveys,
• customer complaints and questions,
• market research, and
• feedback from frontline personnel.
Also, include customers in strategic activities, such as product-development sessions.
4. Translate customer-satisfaction information into loyalty measurements:
Completely satisfied...into...very loyal
Satisfied...into...easily lost
Dissatisfied...into...very disloyal
Also, compare your industry to others to determine how much of your customers’ loyalty is true (based on your delivery of superior value) and how much is false.
Factors such as loyalty-promotion programs (e.g., airline frequent-flier plans) or high costs of switching to a rival (e.g., hospitals when a patient is in the midst of treatment; computer companies with proprietary technologies) can create “false loyalty.”
5. Completely satisfy customers by providing top-notch support services (making your basic product or service easier to use) and a highly responsive recovery process when something goes wrong.
You also have to listen carefully to find out how target customers perceive the service experience and what they want most—and then give it to them.
Example: Lexus dealers provide the basics—and much more. They reexamined the car-servicing experience from the customer’s perspective, finding that customers most want car repairs done with minimum inconvenience. Dealers completely satisfy customers by picking up their cars at their homes or offices; leaving loaners; repairing, cleaning, and returning cars later that day; retrieving loaners; and, of course, checking later to make sure the repairs were done properly.
What explains this? And how can companies ensure true customer loyalty—that single most important driver of long-term financial performance?
There’s a tremendous difference in loyalty between merely and totally satisfied customers. Whether in highly competitive markets (e.g., cars), virtual monopolies (e.g., local phone service), or industries with strong loyalty-promotion programs (e.g., airlines), customers will stray the instant they’re no longer completely satisfied—and have a choice.
Yes, totally satisfying customers requires some investment and ingenuity—but it pays for itself many times over. Here’s how to keep your best—i.e., most profitable—customers delighted and devoted.
The Idea in Practice
To secure your best customers’ loyalty, take these steps:
1. Clearly define your target customers, i.e., those you can serve best and most profitably. Be willing to let chronically unhappy customers go—they’re an expensive drain on corporate resources and aren’t likely to feel satisfied, no matter what you do.
2. Measure customer satisfaction systematically by ensuring that the process:
• is unbiased, i.e., not distorted by interest groups within your company,
• lets you compare products, locations, and business units,
• lets you capture and store information on individual customers, so you can tailor improvements to their needs.
3. Use a variety of measurement methods, including:
• customer surveys,
• customer complaints and questions,
• market research, and
• feedback from frontline personnel.
Also, include customers in strategic activities, such as product-development sessions.
4. Translate customer-satisfaction information into loyalty measurements:
Completely satisfied...into...very loyal
Satisfied...into...easily lost
Dissatisfied...into...very disloyal
Also, compare your industry to others to determine how much of your customers’ loyalty is true (based on your delivery of superior value) and how much is false.
Factors such as loyalty-promotion programs (e.g., airline frequent-flier plans) or high costs of switching to a rival (e.g., hospitals when a patient is in the midst of treatment; computer companies with proprietary technologies) can create “false loyalty.”
5. Completely satisfy customers by providing top-notch support services (making your basic product or service easier to use) and a highly responsive recovery process when something goes wrong.
You also have to listen carefully to find out how target customers perceive the service experience and what they want most—and then give it to them.
Example: Lexus dealers provide the basics—and much more. They reexamined the car-servicing experience from the customer’s perspective, finding that customers most want car repairs done with minimum inconvenience. Dealers completely satisfy customers by picking up their cars at their homes or offices; leaving loaners; repairing, cleaning, and returning cars later that day; retrieving loaners; and, of course, checking later to make sure the repairs were done properly.