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Why Customer Satisfaction and Loyalty are Not Enough
Customer-based measurements enable business leaders to not only understand the satisfaction and loyalty levels of key customer groups, but also help build programs and initiatives that foster stronger relationships with high-value customers.
Posted Feb 16, 2004
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Standard customer satisfaction measurement programs assess customer satisfaction levels with your company's solutions and services. Good satisfaction analyses also gather insight about customer perceptions of your company throughout the customer lifecycle, and focus significant energy on service and met expectations. Customer loyalty assessment programs take it one step further, by identifying and measuring how loyal customers are to your company, brand, products, and services. In many cases, the goal of customer loyalty analysis is to assess the likelihood of whether current customers will buy more, and to gauge the probability of a specific customer or customer profile remaining loyal or defecting. Customer-based measurements enable business leaders to not only understand the satisfaction and loyalty levels of key customer groups, but also help build programs and initiatives that foster stronger relationships with high-value customers. This invaluable data and the insight it brings often drive changes in how companies market themselves and their brands; how they position, package, and price their solutions; and how they deliver those services to their high-value customers. Further, understanding satisfaction and loyalty has been known to help organizations predict revenue and profitability. The science and art of customer relationships Ultimately the intent of conducting these analyses and developing supporting programs and steering committees is to increase your company's ability to keep customers satisfied and to increase customer retention. Conversely, creating customer leverage focuses on building relationships with satisfied and loyal customers--relationships based on real successes with your company's solutions, and your company's ability to promote those successes in the marketplace. Customer leverage is only successful when you build consistent relationships and rapport with your customers. Some have argued that customer satisfaction and loyalty is a science; we agree. But customer leverage is an art. Customer satisfaction and loyalty initiatives are extremely valuable if you're looking to retain and increase market share. Customer satisfaction, perception, and loyalty are pillars of customer leverage; however, they should not stand alone. Loyal and satisfied customers also make for great long-term partners and references.
The challenge with solely relying on satisfaction and loyalty analyses to understand your customer base is that they focus only on the past and present. Satisfaction and loyalty are time sensitive, while customer leverage reflects a mutual long-term investment made by your company and its customers. Defining customer leverage Customer leverage means ensuring that customers successfully implement and deploy your products or services. Once you establish your customers' successes, information concerning how they came about becomes customer intelligence. When you then use this intelligence to help you close deals and to validate your solutions to the media and industry analysts, you're employing customer references. And when you then integrate your customers and their references, throughout your entire customer cycle and into your organization's product development and rollout, you've achieved customer leverage. Customer leverage is a mainstay, as it requires your organization to remain current with your customers and to uphold stringent principles of support and enablement. The benefits of customer leverage Why leverage your customers at all? First, leveraging customers is what one must do to shorten enterprise sales cycles and enable high-impact marketing and public relations. Second, leveraging customers allows you to gain valuable feedback that drives how your company develops market-driven products and services. And finally, if done correctly leveraging customers can spawn relationships or "conversations" with your customers in which they discover business challenges and needs that they may not have realized existed. Customer leverage opens doors within vendor-customer relationships and enables your company to reinforce the value of its solutions and solidify its position. So when we say that satisfaction and loyalty are not enough, it's because customer leverage is the third pillar of using your most strategic assets--your customers themselves--to benefit you. About the Author Promise Phelon is a principal and cofounder of Phelon Consulting. Prior to founding Phelon Consulting, she held a senior product marketing and strategy position at BEA Systems and has held strategic positions at SAP and D-Communications. Phelon holds an MBA in strategic marketing from Pepperdine University and a BS from Southern Methodist University. Contact her at promise.phelon@phelonconsulting.com.
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