Customer Loyalty & Deceptive Customer Satisfaction Scores

June 3, 2015

If you typically receive high ratings on your customer satisfaction survey, don’t be fooled and think your job is done.

While it is good practice to use a rating question type in your survey to measure overall satisfaction, this question alone will not help you make improvements.

In fact, a high score on the satisfaction question can give you a false sense of security since it doesn’t tell you how engaged or loyal your customers are.

High satisfaction scores might be hiding the fact that many of your customers are ready to jump ship and find another provider.

According to a study by Charles Schwab:

“Research shows that most customers who end up defecting to another business have declared themselves ‘satisfied’ or ‘very satisfied’ in such surveys not long before jumping ship”.

Why is this? More importantly, what can you do about it? To answer this question, you need to understand the difference between customer satisfaction and customer loyalty.

Customer Satisfaction Versus Customer Loyalty

Just because a customer says they are satisfied, that doesn’t mean that they are loyal. Their brand loyalty may be with someone else but they think highly enough of your product to use it if their first choice isn’t available.

Net Promoter Score (NPS) Measures Customer Loyalty

A better measurement of how loyal your customers are, is the Net Promoter Score. The Net Promoter Score asks:

How likely are you to recommend [your company] to a friend or colleague?

Customers respond on a 0-to-10 point rating scale and are categorized as Promoters, Neutrals, or Detractors.

  • Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth

illustration of nps score

To calculate the score, the percentage of Promoters is subtracted from the percentage of Detractors.

The NPS question may give you a better perspective on how likely your customers are to stay with you, but it still doesn’t answer where or how you could make improvements. Be sure to follow up an open text question that asks customers for suggestions on how you improve their experience.

At Alchemer, we have found 3 key factors that impact customer loyalty.

3 Key Components for Building Customer Loyalty

  1. Value: Reliable Customer Experience
  2. Trust: Dependable Customer Service
  3. Transparency: Consistent Brand Message

#1. Reliable Customer Experience Adds Value

When choosing a product or service, people look for a brand that speaks to their needs. The brand must provide a solution within an acceptable time frame and price range.

When a brand prevents customers from getting the best value, then they re-evaluate the product or service.

For example:
A coworker was telling me about her experience with her iphone waterproof protective case.

It is an awesome product – until it rips.

Fortunately, it has a lifetime warranty. But it is a tremendous hassle to meet warranty requirements. The brand places the burden on the customer to prove that indeed the product is broken.

The customer must submit:

  • The original receipt
  • The original packaging that the product cm n with an image of the barcode
  • A picture of front and back of case showing defect

A real pain – but she does it. Finally, she received the replacement product and was very pleased – she was actually surprised that they honored the warranty since it had been over a year old.

Several months later, the case rips again. She repeats the arduous warranty process. Again. Today, she is on her third case. As much as she loves the look and feel and the benefits of this product, its short life span has decreased its value.

If the brand were to survey her at this phase, they would see a lower satisfaction rating.

Take away:
Its imperative that you seek feedback at all phases of the customer journey so you know where you are succeeding and failing.

Be Flexible – Customer Needs Change

As a business grows or changes, so do its service and product needs. This might mean they need more or less of a product or service provider.

To keep these customers, you need to be flexible.

For example:
For years I was completely satisfied with XYZ’s email services. Their services met my needs at an affordable price.

But as my consulting practice grew and I landed more and bigger clients, my needs and expectations of this service changed.

I needed a robust email service provider with global unsubscribe, an automated response feature, customizable newsletter templates with poll capabilities, and easy reporting metrics.

I valued their services as a small business owner, but it was time for me to move on.

Take away:
Provide option. Have a tiered product plan that offers growing businesses needed offerings.

#2. Dependable Customer Service Builds Brand Trust

Perhaps you received a great product but the service was undependable or untimely?

Poor service will ruin a customer’s experience no matter how much they like the product.

For example:
I recently had friends from out of town come to visit. I wanted to impress them with the rich culture found in town so I carefully selected a restaurant that was well known for their exotic cuisine. I had eaten here before and had a wonderful experience.

The food was absolutely delicious and the price was reasonable. But the service sucked.

The courses were not served in a timely manner and the waiter made us feel like we were a burden each time we flagged him down for another drink or appetizer. Shouldn’t they show appreciation for my business? After all, I was paying them to make my guest feel special.

While the dishes were fabulous and the price was reasonable, I would not recommend them.

Take away:
When you survey your customers, ask them to rate your product and then the service. Then use a follow up text question for them to explain why they chose that rating.

When Disney surveys their customers about their experience at Disney Land, they ask their customers if there was anything “less than extraordinary” during their stay. What a great way to solicit feedback! It entices customers to mention even the small or petty issues which gives Disney great data to act on. 

#3. Brand Transparency and Customer Expectations

Whether directly or indirectly, every company makes a series of promises to its customers. When these expectations aren’t met, brand loyalty declines.

If your brand experiences a problem or changes its offering, inform your customers. While they may not understand the logic behind the change, they will appreciate that you let them know.

Negative surprises never go over well so be transparent when you make a change that impacts your customers.

For example:
For several years I have been going to the same hair salon. Like most women, I enjoy a little pampering now and then.

This place does it. The stage is set with its expansive west facing windows that show off the breathtaking view of the rockies. Everything shines and glitters which promises that you are about to be “blinged”.

While the stylist consults with you, an assistant massages your neck. I particularly enjoy the complimentary hand massage while being “foiled” and blown dry.

I am delighted with a perfect cut and color each time. But the last time? I felt like I got screwed at the door.

Obviously I expect to pay more for this type of service. But I did not expect their price to increase by 30% without being told before hand.

Take away:
Be consistent, or at least transparent when changes are made. If you want to surprise your customers make sure they are welcomed, pleasant surprises.

Transparency allows customers to feel they are in control. Had I known about the price increase I could have determined whether I felt the services were worth it.

Measure Customer Loyalty And Customer Satisfaction

Remember that customer satisfaction does not mean customer loyalty.

To measure customer loyalty:

  1. Use the NPS question type to gauge how likely your brand is to recommend your brand.
  2. Always follow up this question type with a quantitative question so you can learn where and how to improve your customer’s experience.
  3. Survey throughout the customer journey.

Customer Loyalty Leads to Brand Loyalty

Be loyal to your customers and they will be loyal to your brand. Always consider their needs and how to improve the experience as their needs change. Remember to be transparent when you make a change or a mistake. They will respect you for it, and that is what builds trust.

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