n business we are told that customer satisfaction is paramount to the success of a company. The customer is always right (within reason) and if they leave with a smile you have done your job. They will surely come back, and bring their friends with them, right? Sadly that is not the case – in fact, although customer satisfaction is important, it does not guarantee more sales. The truth is happy customers are merely precursors to what is really important, customer loyalty.
So what’s customer loyalty, anyway? Harvard Business School defines it as customer behaviors, rather than attitudes. Collectively it is interpreted as the three Rs: retention, repeat business, and referrals. In layman’s terms– loyal customers make you more $$$.
So what’s wrong with customer satisfaction?
Known loyalty expert Fred Reichheld reported in a Harvard Business Review article that between 65% & 85% of customers who defect said they were “satisfied or very satisfied” with their former supplier.
Don’t get me wrong, customer satisfaction is important. But it alone does not yield dollars. I like to think of it as a prerequisite to customer loyalty. Like your Philosophy 101 class in college. Whereas by achieving customer loyalty you’ve progressed through the 300 level courses and are well on your way to becoming the next Descartes.
I think – therefore I am
Unfortunately, in business, you cannot simply will your loyal customers into existence. In regard to referrals, studies show that the vast majority of “satisfied” customers reported a willingness to recommend services to others. But guess what? Most don’t. The responsibility lies on the company to make sure their customers refer them.
It starts by making your customers smile. Then is the proactive approach of converting those beaming comrades into devoted advocates.
Ask for testimonials!
We all know that testimonials serve as written validations and promote social proof for a company. “Come on, everyone’s doing it!” But those testimonials you have scrolling on your website actually have quite the impact on the author as well. Firstly, people like to stay consistent with what they have said. And, by writing a testimonial for the world to see they have formally stood behind your company. This promotes customer retention. It would seem pretty silly for someone to leave a great company based on a nominal price increase. Quite shallow, wouldn’t you say?
Testimonials also serve as a rehearsal for verbal referrals. Get them used to talking good about your company; it doesn’t matter who sees it. Chances are they will recall their nice words during a fitting conversation.
Here’s how. Email your customers and ask that they provide you with a testimonial. Of course you are not going to ask every customer for positive feedback – that is why the NPS is a good indicator of your promoters.
Response rates increase with a witty subject line. At Rocket Referrals we’ve seen a 40% response rate with “John, we have 2 questions for you”. Timing is also important. That is why we follow a positive experience, interaction, or reach out to new customers for best results.
Do a little something extra
Providing satisfactory service may yield customer satisfaction. Going beyond expectations will likely yield customer loyalty. Apple Inc. does this consistently by innovating products that wow their customers. A computer is supposed to compute. I can check email on a vintage PC in a small town library (you know, the ones with the old flip-down monitor protectors). I can leave feeling satisfied, but I am not going to rave about it to my friends. But when my MacBook allows me to sign a PDF document using my webcam? Now that’s cool. (Yes I am a fan of Apple – but PCs are okay, too).
It doesn’t matter if you offer designer jeans or insurance policies. Exceed expectations to the point that people can’t shut up about you. This requires doing the unexpected by offering surprises and service outside the scope of your product. It doesn’t take a big change. It could be as simple as writing a handwritten note saying thank you. The good news is that even the unexpected can be automated. At Rocket Referrals we developed realistic handwriting tech for this purpose. The point is, If they don’t see it coming it will have a memorable impact- such an effect that they are sure to tell others.
Develop relationships with your clients
Business with the customer extends past the transaction. Exchanging currency for products or services alone establishes a superficial relationship based on, well, money. Companies that stop here are easily forgotten. Create an ongoing relationship with the customer. By serving up a batch of loyalty to the customer you can expect the same in return.
Avoid offering monetary incentives to your customers. Enticing customers with coupons and incentives for referrals for example will make them feel like you are buying their love. Communicate with them as people, not dollar signs. Ask how you can help them- or their friends and family. Continue the relationship with followup communication. Touch them periodically and ask how you can help- not how you can profit from them.
Again, the goal is to establish ongoing relationships with your customers. They will reward you by sticking around and going to bat for you by offering out referrals.