Sue is a loyal customer at the corner coffee shop. She buys a large Americano with cream on her way to work every morning. She knows the baristas, and the stop is part of her routine. But Sue’s customer satisfaction survey reveals she is dissatisfied with several aspects of her daily brew, including price and the serving sizes.
The fact that Sue’s behavior doesn’t match her attitude, and that she is both a loyal customer and dissatisfied customer, highlights the difference between the two metrics. This is an important distinction for business leaders. Oftentimes, companies think they are measuring one when they are actually examining the other. Understanding the differences between loyalty and satisfaction can help obtain better insights into customers in order to promote growth and retention.
Customer satisfaction is the measure of the extent to which a customer’s expectations are met. It encompasses the attitudes and feelings customers have about your brand, product or service (like Sue’s feeling about the cost of her coffee). Satisfaction relates to the results of a process and is therefore subjective.
Customer satisfaction looks backwards and is tightly aligned with how customers feel about their last transaction or interaction with your company. Because of this, it’s quick to grow and, you guessed it, disappear.
Customer loyalty, by comparison, describes behavior and is therefore objective. Customers can behave in loyal ways (like Sue going to the coffee shop every morning). Regular, repeat customers who choose your product over the competitors’ and recommend it to family and friends are behaving in loyal ways. Very loyal customers will even pay a premium for your product.
Customer loyalty describes a relationship. In fact, loyalty can withstand a negative product or service process. It's slow to grow and slow to decline, making it much more suitable to predict future behavior than customer satisfaction.
In contrast to the story about Sue, the mobile phone industry is a good example of wide satisfaction but little loyalty. Many mobile customers will leave their carrier when faced with a new offer, even when they report satisfaction with their current service. This highlights what many studies have proved to be true: customer satisfaction says nothing about a customer's future behavior. In other words, there’s a big difference between what people say (their attitudes) and what they do (their behaviors).
The key to understanding customer satisfaction and customer loyalty is to ask the right questions. If you’re interested in satisfaction data, ask the questions that reveal attitudes. Just know that in order to understand customer loyalty (and what business doesn’t want that?), you have to ask specifically about the behaviors that are important to your business.
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