Recently I had a meeting with Darrell Hardidge from Saguity and the subject of Customer Satisfaction was discussed.

His company has done a lot of research around what it takes to create a loyal customer (they interviewed over 150,000 people). He mentioned that in his view customer satisfaction is overrated. In fact customer satisfaction is just not good enough!

“52% of satisfied customers are likely to defect to a competitor” – Saguity

Most companies focus on customer satisfaction. If you think about yourself and how you make purchase decisions is a satisfactory experience really enough to guarantee that without doubt you are going to return to the same shop or supplier?

I think most people would agree that the answer is no: satisfaction is not enough! It’s more likely that you won’t return to the supplier if you are not satisfied than that it is certain your will return when you are satisfied.

  “96% of unhappy customers don’t complain, however 91% of those will simply leave and never come back” – 1Financial Training services”

For most people an excellent customer experience would guarantee they would return to the supplier. People are busy and want to make their own life easier. By providing an excellent customer experience you eliminate the need for your customer to make a choice between you and another supplier and therefore freeing up time and mind space to do other things and make other decisions.

 “Customers who rate you 5 on a scale from 1 to 5 are six times more likely to buy from you again, compared to ‘only’ giving you a score of 4.8. – TeleFaction data research.”

Many businesses are focusing on attracting new clients to increase revenue and at the same time they are letting existing customers walking out of the back door by providing average service and giving them a reason to look elsewhere.

There is no doubt most businesses will have customer churn. However even though most people know it is far harder to attract a new customer than to retain an existing one the focus is on acquisition not retention.

“It costs 6–7 times more to acquire a new customer than retain an existing one” – Bain & Company

So why focus on customer acquisition and ignoring customer retention? It might be carrying water in a sieve!

Without a proper customer retention strategy you will have to bring a lot of new clients to grow or even maintain your business.

In many businesses it is not that dramatic and it would be more like carrying water in a leaking bucket. So it will be more a question of how many holes do I need to plug and how do I go about it.

The question then becomes: How many and which customers are not returning to us and more importantly why?

To find out you need customer intelligence. Track what the customers’ experience scores (e.g. NPS – Net Promoter Score, CAI/CAS – Customer Appreciation Index/Score) are and track this in your CRM system and make it visible to everyone in the organisation.

Regular customer experience reviews will help you a lot to gain the perspective of your customers. But make sure you don’t focus on satisfaction as that might not be enough for them to come back!

We have put an infographic together with some of the statistics that I mentioned in this article.

Customer Loyalty Infographic

By Peter Dijkema, Client Success Manager, Organon Consulting

A 20-year veteran in the business solutions industry with over 15 years of experience in customer relationship management, Peter Dijkema has worked in numerous sales and marketing roles with major and small technology companies in Europe and Australia. Peter Dijkema is co-founder of Organon Consulting with a focus on helping small and medium businesses to serve their customers better, fix the ‘leaky funnel’ and increase revenue and Not-For-Profit organisation improve stakeholder relationships, increase constituent engagement and increase funding. He also act as an adviser around CRM technology decisions and strategies for small and medium sized businesses. 

Email: pdijkema@organonconsulting.com.au
Twitter: @pdijkema
Web: www.organonconsulting.com.au
LinkedIn: au.linkedin.com/in/peterdijkema1/