Are Delighted Customers Always Loyal Customers?

For a few decades we have believed that high levels of customer satisfaction – delighted customers – translates into the elusive goal of having loyal customers. And while there is a small correlation, sadly, it’s not always true.

“What?” you may be asking, “Are you saying that after all these years of trying to create a bunch of thrilled, excited and delighted customers, that it’s been a waste of time?” My answer today will be “Yes and no.” I’ve come to realise that there are some important factors at play here, not least of which is that it is unsustainable, if not impossible, to delight all of your customers all of the time. (See the article “When Delighting Your Customers Isn’t Enough,” at the following link: http://www.leadershiplaunchpad.co.za/articles/89.) In addition, you can probably also identify a whole bunch of customers in your business that are delighted – but not necessarily loyal. (You are possibly also able to identify a few unhappy customers who appear to be loyal, but more of that later.)

For many years many large companies have kept track of customer satisfaction levels: How do our customers feel about doing business with us? Are they happy or unhappy (or indifferent)? These are relatively easy things to measure. But are they meaningful? They are based on customers’ perceptions, and of course they are important. But they are biased, and customers are often confused, or just lie about these things.

However, what we should be measuring is customer loyalty: the ways in which customers behave towards our business. This is far more difficult to measure, and that is why companies tend to avoid it. But it is of vital importance because of the consequences of having delighted versus unhappy versus indifferent customers that your business has to live with. There are typically some very important customer loyalty behaviours that impact on your business: Repeat business, propensity to buy more and pay higher prices, likelihood of recommendations and referrals, the manner in which they respond to staff, and so on.

I have come to the conclusion that we can distinguish between four different groups of customers, and for each group we will begin by looking at the different levels of satisfaction as demonstrated by their perceptions and feelings, and the different levels of loyalty as demonstrated by their behaviour.

Obviously, you would be very happy if your customers were all both highly satisfied, (delighted, thrilled, excited, or ecstatic,) and also extremely loyal. We’ll call these the Partners, (or advocates, or angels, or apostles.) These are the customers who not only feel good about your business, but also display their positive feeling by being loyal. The bad news? In most businesses, only 2% to 4% of customers can be truly classed as partners and advocates.

At the opposite end of the scale are the customers who have very negative feelings towards your business, (unhappy, disappointed, dissatisfied, disgusted, or betrayed,) and display this negativity through vengeful behaviours that do a lot of harm to your business. They are the disloyal customers who feel they owe nothing to your business, and we have called these the Terrorists, (because they can do major damage to your business with a relatively small investment on their part.) While in most companies there may be only 1% of your customers who are terrorists, your aim should be to have zero terrorists in your organisation, and your response to problems needs to be legendary. You have to be able to prevent the things that cause frustration, complaints and problems, because it is so difficult to recover from it when it happens.

However, in many businesses there is a group of really unhappy customers who also appear to be loyal, especially if we look at behaviours like repeat buying and paying higher prices. These are very dangerous customers because they are unhappy and negative, but they feel trapped, like Hostages. The customer as hostage is very dangerous because given half a chance they will turn into extreme terrorists, and may only stick it out with your company because there are high barriers to switching. They don’t like feeling trapped, (in fact, that may be the reason why they feel so unhappy,) and many will fight back in any way they see fit.

Finally, we have those customers who, when asked, report back that they are neutral, or maybe even positive about the business. However, it is obvious that this group is not loyal. They don’t care who they get their stuff from, as long as it is the best deal that they can get. We have called these customers Mercenaries. This group of mercenaries poses the biggest danger to most companies. Why? Because there are so many of them! In most businesses, there are somewhere around 80% to 95% of customers who are indifferent and apathetic to the company. They don’t actually care about who they do business with and where they spend their money. They say things like, “Never mind, I’ll just go somewhere else.” Or they do business with you because it is convenient, not because they make a conscious choice. Or they just be too lazy to leave*.

But the bad news is that they can be incredibly easily lured away by your competitors in an instant.

So if 80% to 95% of your customers will defect in the blink of an eye, this creates enormous uncertainty for your company, and this is the most urgent need that must be addressed.

The most important question you need to ask yourself is what your business needs to do get all of the Hostages, Terrorists and Mercenaries to move closer to becoming your Partners. (Many of the other articles on this website will help you to come up with ideas to do just that.)

*This comment with thanks to my internet friend Gautam Mahajan


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