Why don’t we grow when we have so many satisfied customers?

By Brian Rosenberg, CEO, Servicemind

There is nothing wrong with measuring customer satisfaction of a product, service or a transaction - quite the reverse. Unfortunately, this alone rarely creates growth in market share, turnover and the bottom line that many companies expect. Not only because surveys in themselves do not create satisfied customers (it is well known that a pig will not become fat from being weighed), but also because the actions you take on the basis of the survey, often do not give the return you hoped for.

This causes some companies to conclude that it’s not worth prioritizing a targeted effort aimed at customer experience. Instead, familiar tools are used, such as expensive advertising campaigns, more or less thought out discount schemes, cuts in front staff and focus on better purchase agreements and therefore increased margins.

All these actions immediately improve the bottom line and increase sales. Results that can be seen quickly, so then it must be a success? In the short term, definitely yes! However, what about the slightly longer term?

Satisfaction versus Loyalty

In our opinion, the above is a fallacy. If you are attracted by it, it is because you did not adequately distinguish between satisfaction on one side and loyalty on the other. Before we conclude anything, let us look at the difference. The degree of satisfaction can be defined as:

-       The difference between what the customer expects, and what the customer gets.

Here we are talking about a fight with bad odds, which can often only be lost. If the customer’s expectations are met, it is obviously good - but there is not necessarily glory, honour, or good publicity to be gained. Customers actually allow themselves to often perceive it simply as something to be expected of the company. On the other hand, if the customer’s expectations are not met, customer dissatisfaction is affected disproportionately more, and they may even tell others about their negative experience.

It is this "logic" of customer satisfaction, which means that even successful efforts that only focus on increasing customer satisfaction often disappoint horribly and make companies feel they have wasted both time and money.

Loyalty on the other hand is very directly linked to turnover and the company’s bottom line, and characteristics of a loyal customer are that:

-       The customer buys from the company more often (Market share)

-       The company achieves an increased share of customer's purchase (Share of wallet)

-       On their own initiative, the customer speaks positively about the company (Promoters)

A crucial difference between satisfaction and loyalty is that while satisfaction is based on the customer's existing expectations, and where the loss from a mistake is disproportionately large compared to the gains from success, so by its nature, loyalty is more directly related to what the company is ultimately seeking, namely purchase volume and traffic in the shop.

How do we do it then?

My moral here is simple. Comprehensive customer surveys are important. It is important to measure customer satisfaction. However, it is also important to measure customer loyalty. Here applies a BOTH AND principle, if a company wants to identify the efforts that have the desired effect on loyalty.

The answer to my initial question is therefore that growth often fails to happen, because your customers are not loyal, despite a relatively high level of satisfaction!