Smart companies know the importance of striving to keep their customers
happy. After all, studies have found
that the cost of acquiring a new customer is five to 10 times more than the
cost of retaining an existing one. And
so the measurement of customer satisfaction and loyalty becomes an important
part of a marketing strategy – for example, an annual survey to customers to
gauge how they feel about the business.
But, you may ask, why measure both satisfaction and loyalty – aren’t they the same thing? A satisfied customer is a loyal customer, right? Not necessarily.
But, you may ask, why measure both satisfaction and loyalty – aren’t they the same thing? A satisfied customer is a loyal customer, right? Not necessarily.
Customer satisfaction is fairly straightforward. At a basic level, a measurement of satisfaction tells us how pleased (or unhappy) a customer is overall or with a specific aspect of a company. Surveys ask customers to indicate their level of satisfaction directly, typically using a multi-point scale (such as very satisfied, somewhat satisfied, neutral, somewhat unsatisfied, and very unsatisfied).
Customer loyalty measures the security of a customer base – that is, how likely they are to remain customers. Satisfaction certainly plays a part in customer loyalty. But loyalty is more complex than simply how happy a customer is with a company or product. Many factors affect how likely a customer is to purchase from the same company again versus going to a competitor. For example, considerations such as price, the availability of viable alternatives, the difficulty or cost of switching, and even a feeling of connection or relationship with the company, all play a role. Because customer loyalty is multi-dimensional, it can be difficult to accurately assess through a single survey question. Therefore, companies often employ a loyalty index – a series of questions addressing loyalty through different angles, the answers to which are later compiled into a single metric that can be tracked over time.
Conducting a formal customer satisfaction and loyalty survey can give you a full picture of how your customer base sees your company, which aspects shine and which are falling short, and – perhaps most importantly – where to focus in order to best solidify your customers’ loyalty.