Developing Customer Loyalty for Life

The ultimate goal of customer service is to create customer loyalty for life.  Understanding loyalty, and what makes your customer loyal and how to measure this, enables a company or person to improve customer-driven service quality.

To better understand what customer loyalty is, it is useful to understand what it is not.  Customer loyalty is sometimes mistaken for:

• Customer satisfaction alone is not loyalty.  Satisfaction is a necessary component, but a customer may be satisfied today but not necessarily loyal to you in the future.
• A response to some trial offer or special incentive is not loyalty.  You cannot by loyalty; you must earn it.
• Large share of the market is not loyalty.  You may have a large percentage of the customers for a particular product or service for reasons other than customer loyalty to you.  Perhaps your competitors lack quality or your current prices are more attractive.
• Repeat buying alone is not loyalty.  Some people buy as a result of habit, convenience, or price but would be quick to defect to an alternative.

Recognizing counterfeit loyalty is important.  It can lull you into a false sense of security while your competition may be building real customer loyalty.

Customer Loyalty

So, what exactly is customer loyalty?  A more reliable definition has evolved in recent years.  Customer loyalty is best defined as a composite of three important characteristics:

• It is driven by overall satisfaction. Low or erratic levels of satisfaction disqualify a company from earning customer loyalty.
• It involves a commitment on the part of the customer to make a sustained investment in an ongoing relationship with a company.
• It is reflected by a combination of attitudes and behaviors, including:
  • repeat buying
  • willingness to recommend the company to others
  • a commitment to the company demonstrated by a resistance to switch to a competitor

“Unless you have 100% customer satisfaction, you must improve” – Horst Schulz