Customer Loyalty and Satisfaction Free Essay Example

Loyalty is a widely used word in business, particularly in retailing. People in marketing often associate loyalty with a business, as a commitment shown by the customer towards a business house by constantly patronizing it for all needs. There are several aspects of loyalty, which each customer associate to, at various levels. Some would be loyal just because they are satisfied, while some would not be loyal, although satisfied (Barnes). Research has shown that customers are more likely to be satisfied when the experience a physical service than a remote service, due to the level of interactivity and human contact.

Therefore satisfaction by physical encounter can have a positive effect on the key drivers of customer loyalty. The perceived costs associated costs, trust and the reputation of the service gets translated into loyalty directly. In the case of a series of encounters, loyalty may be established by a sense of overall satisfaction. It should be noted here that relationship building is a characteristic of the buyer and is independent of the services offered.

Customer relationship between customers and businesses is facilitated through human contact.

In a direct situation, non verbal communication using face expressions, gestures and body language contribute immensely to relationship building. In a remote service encounter like using a web, phone etc. , the loyalty also depends on the factors associated for preferring remote service. Here the customer may be loyal even if the remote service is poor, because he may have no options. Alternatively, he may like the service, but still may not be loyal when he switches away from remote service (Jos).

Customer Loyalty and Satisfaction 3

To create customer loyalty, everyone in the organization must be focused on customer loyalty as their goal. For customer loyalty, customer satisfaction is important and customer satisfaction is achieved through excellent service. The loyalty of a customer to an organization may be interpreted as an overall satisfaction in transacting business with the organization, an intention to create a relationship with the organization, the intention to be a repeat buyer and recommend to others and be unwilling to switch to a competitor. To make a customer feel valuable, is very important to gain loyalty.

It has been established that about 60% to 70% of customers are unloyal and disassociate due to reasons other than price and quality. People get annoyed by the experience of transacting business with organizations that do not value them. Most customers who have emotional reactions when recounting their transactions would recall that they had been treated poorly, or put into inconvenience or have been cheated on the measure. Handling complaints is an important aspect of customer satisfaction. When complaints are handled well, the customers are more likely to do business with the company again.

By just watching a customer, one can assess the feeling and comfortability of the customer. It is important to assess the way customers are treated and compare it with the treatment offered by their competitor. Companies have several sources for getting feedback, but the most important one is perhaps by listening (Timm, 2002). Listening to what the customer says, without interrupting, is important. Focus on the customer while listening to him, make eye contact and get away all distracting thoughts. Listening and forging an understanding is a primary step to customer loyalty. Customer Loyalty and Satisfaction 4

It should be realized that loyalty cannot be created by customer satisfaction alone. It is wrong to expect customers to be loyal just because they are satisfied. Customers may continue to buy from a company even when they are not totally satisfied, but would stop buying when they are totally dissatisfied. Loyalty is an activity and not an emotion; it’s only an act of repeat buying. However repeat buying is related to application of interpersonal skills (Lawfer, 2004). When these interpersonal skills are used according to different purchase situations, the relationship with the customer is strengthened.

A company must understand that it can only bring in a customer again, by making him want to come back. Creating customer loyalty is based on the result of ‘people and people doing business’. When the customer feels the service person is sincerely paying attention, it makes the customer feel important; and customers like the person they do business with. Responsiveness is crucial in building relationships. When this cycle is kept going, occasional customers would soon turn loyal. The importance of the customer is demonstrated by KWHL— which stands for Know me, Understand me, Help me and Lead me.

The acronym also called as ‘Cool’ tells us how important customers are to be known, understood, helped and led. A suspect is someone who might possibly buy a product, while a prospect is someone who needs the product and has the ability to buy it. It is not easy to convert a suspect to prospect. Here pricing and terms like delivery, warranty etc. , would be considered important too. However customer satisfaction and experience is vital in Customer Loyalty and Satisfaction 5 converting the prospects to loyal customers. Customer retention is more rewarding than customer acquisition.

The customer expectations and perceptions are influenced by the activities and developments during, before and after the delivery of service. When a customer enters a service facility, the quality of the service is interpreted by factors like time and conditions under which the customer gets the service. The first face-to-face contact with a service worker has a considerable impact on the customer’s perception of quality, as first impressions are lasting (Barnes, 2001). The contact worker should have a good knowledge of the services available and must be capable of dealing with the customer in a caring and efficient manner.

Mismatch between the customer’s expectations and perceptions are dealt at the departure point. This is a chance to let the customers know that their views of quality are important to the success of the management. Follow-up action after departure would contribute to bringing back the customer or refer other friends and acquaintances. The meaning of advocate, is to plead or defend. Imagine if the customers are so satisfied with a company’s products or services, that they would willing to recommend the company to others in their circle. Advocacy helps in increasing market share and higher levels of retention.

Sometimes we see customers even tattooing a company’s logo like Harley Davidson, on their body, associating the brand name to their ownership. Advocacy at a very high level like this is rare and beyond the reach of most consumer companies. However the basics are not far off for all the rest, irrespective of Customer Loyalty and Satisfaction 6 the industry or the customer profiles. A strong customer satisfaction level transforms the delighted customers to becoming a sales force. Such scenario is the result of a distinctive customer experience with value that goes much beyond satisfaction.

For firms involved in professional services, such services are translated to ‘life’ relationships with their customers. Customers would associate them as preferred suppliers on all their projects and ventures (Shaunsmith). It is very important for the customers to believe that the company’s prices, features, quality and other factors are of superior value, for them to become promoters. Obviously the customers must feel good of their relationship with the company and believe that the company understands them, values them and listens to them.

Only companies that are capable of standing up to this belief would create promoters or advocates, who would refer them to their families and friends (Gangemi). Spending money finding new customers to replace lost customers is a never ending exercise, which could be avoided by cultivating advocates who would contribute to success. By helping customers fill their needs and goals, the company exhibits its potential to create customer advocates. Statistics show that by just increasing customer retention by just 5%, profitability can be raised to 95%. Acquiring a new customer is at least 5 times expensive, compared to retaining one.

Some businesses can command customer loyalty because of its scarce product or service, while other businesses have to earn such relationships with their service and interaction qualities. Most companies acknowledge Customer Loyalty and Satisfaction 7 that customer relationships are important and that they too value them, but on ground, they do little to achieve them (Kahler). The main advantage of good and superior customer relationships is not that they would give more business directly, but that it offers chances to bring in newer opportunities in the form of customer advocates.

No databases or discounts can substitute genuine relationships. Customer Loyalty and Satisfaction 8 REFERENCES Barnes. T Building Customer Loyalty [Electronic Version] downloaded on 15th February 2008 from http://www. mediathink. com/branding/loyality. asp Jos M. C. Service Encounter Effect s on Customer Loyalty [Electronic Version] downloaded on 15th February 2008 from www. ou. nl/Docs/Faculteiten/MW/MW%2520Working%2520Papers/gr%252004-05% Timm P. R. (2002) 50 Powerful ideas you can use to keep your customers Career Press, NJ Lawfer M.

R (2004) Why customers come back: How to create lasting customer Career Press Barnes D. W (2001) Understanding Business: Process. Routledge London Shaunsmith. Customer Advocacy; Turning customers into advocates http://www. shaunsmithco. com/advocacy. html Gangemi J. Customer Loyalty: Dos and Don’ts [Electronic Version] downloaded on 15th February 2008 from http://www. businessweek. com/smallbiz/tipsheet/06/29. htm Kahler Consulting Group. The Customer Advocate Challenge [Electronic Version] downloaded on 15th February 2008 from http://www. bobbikahler. com/services/customer_advocate_challenge. php