Client Satisfaction Is Not The Same As Client Loyalty

Client Satisfaction Is Not The Same As Client Loyalty

Don’t assume that because your surveys show that your clients are satisfied it will mean that they will be loyal…

by Andrew Cooke, Growth & Profit Solutions

A common mistake to make is that client satisfaction and client loyalty are positively correlated i.e. that higher the level of client satisfaction the higher the level of client loyalty. customer loyalty satisfaction

Working in a harder and more competitive environment often results in businesses focusing on marketing and selling to get new clients. While continuing to bring in new clients is necessary for a business’ survival, so is keeping your current clients loyal to your firm.

Satisfaction vs. Loyalty

How loyal are your clients?  And how loyal are your “very satisfied” clients?  The answer may surprise you, your clients might be more likely to switch to a different provider than you think. In a 2009 study, across professional service industries, it was found that:

  • Only 48% of clients are “very satisfied” with their service provider

and that

  • 60% of these clients would consider switching service providers

Results by Industry

satisfaction vs loyalty

So what does this mean?

It means that fewer clients are loyal to you than you think.  It also is likely that your perception of the real situation as regards your clients’ loyalty is significantly over-optimistic.

For example, a legal firm that equates client satisfaction with client loyalty would assume, on the basis of the above numbers, that 50% of its clients were “loyal”.  The reality is that of this 50% of “loyal” customers over half are likely to switch to another provider. This means that only 25% of the firm’s clients are loyal – it has over-estimated the number of loyal clients it has by a factor of two!  This has a significant on its ability to maintain and grow business, and the strategies and plans it needs to have in place.  In all likelihood, because people do not realise this, the firm will probably be following the wrong strategies, and this can be put the firm at risk.

As the competitive environment continues to intensify, it’s likely that other firms are marketing more aggressively to your own clients and, as this data suggests, a good portion of your clients may be open to having these switching conversations with your competitors.

Why do we make this mistake? It is because people confuse the two concepts of satisfaction and loyalty. The difference is like that between “like” and “love”. Let’s look at them separately.

Client Satisfaction

Client satisfaction is a tactical concept and measurement, and it speaks only to one moment in time – typically, right after a client has completed an interaction such as a purchase or has a problem solved. So measuring customer satisfaction merely tells you if you are doing your job, from the client’s perspective.  Clients express satisfaction in an intellectual and rational manner. In doing this, it makes people think. satisfaction guaranteed

Many organizations should be performing up to their customers’ expectations.  This is really just the basics.   While these days consumers are in the driver’s seat, the mindset tends toward “what have you done for me lately?” as opposed to “that transaction went well so I’m a customer for life.”  Thus, good customer satisfaction does not guarantee that you will continue to keep those customers.  How many times have you bought goods “satisfaction guaranteed”, yet gone to another product or provider even though you had a good or even excellent experience?  All of us have done so at one time or another.

Client Loyalty

Customer LoyaltyThis is a much more reliable and strategic measure.  True loyalty – much harder to earn than mere satisfaction – tells you that your customer wants to stick with you over the long haul and that they will share that feeling with others.  Loyalty derives not from “good” transactions but from exceeding the customer’s expectations on a repeated basis. Loyalty engages your client emotionally and makes them want to tell others about their experience of working with you and your relationship.  As such, emotions make people act!

Next Steps

It is much easier (not to mention more cost effective) to retain and grow your current clients than it is to continuously have to fill the pipeline with new prospects.   It is enough to get people to think, you need to get them act.  You need to engage them both intellectually and emotionally.

Have a look at your existing client base and assess their level of satisfaction. If you are not sure, then use this as an opportunity to ask them for constructive feedback, listen and learn.  Then begin to think, from their perspective, whether you have done enough to earn their loyalty – be specific about what you have done or not done as the client perceives it.  Do this individually and then come together as a group to discuss your scores, perceptions and to share insights.

Next Week

So, what does it take to build the type of relationships with your clients that keep them loyal and coming back to your firm year after year? We look at the 9 questions you need answered in next week’s blog.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

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