Customer Loyalty is a Moving Target
My associate, Kimberlee Sautter, brought an article to my attention yesterday about customer loyalty. The author said that one of the common mistakes companies make is to equate customer satisfaction with customer loyalty. I agree with this knowing that print buyers will sometimes switch printers, but not necessarily because they had a bad experience. They switch because the original printer didn’t provide an experience or service that was unique—that another company couldn’t provide. Therefore, if it’s easy to switch (the risks are minimal) and there is a perceived benefit in switching (lower price, for instance), then why not give it try?
The author of the article cites Fred Reichheld’s book, The One Number You Need to Grow. Reichheld contends that customer loyalty can be measured by asking customers a single question: How likely would you be to recommend our company to a friend? His view is that customers who refer your company are putting their own reputation on the line, and that they would only take this risk if they are loyal.
Hmmm. That’s good food for thought, but I believe that a customer’s view of a supplier—and of their peer—is often more nuanced. When they make a recommendation to a friend or peer, they are likely making a judgment about the quality and service that the friend or peer might be satisfied with. Most of us believe that other people are more easily satisfied than we are. In addition, even though your customer has been satisfied by you in the past and believes that their friend will be satisfied, the recommendation in my mind is not a commitment to do future business with your company. Customer loyalty is a moving target. You have to keep re-earning a client’s business.
Of course, it’s obvious that a customer who recommends your company to a peer is much more likely to use your services again than someone who didn’t recommend you. My point is that while there’s a correlation, it isn’t an assurance of customer loyalty.