February 26

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Why customer satisfaction is hurting your business

By Ian Johnstone

February 26, 2020


Satisfied customers are not loyal customers

For many years, the customer services and hospitality industries have touted the importance of customer satisfaction and how it leads to customer loyalty.

But do we really understand what the scores mean, and how they are affecting your business?

Lets start by looking at two important terms

Customer Satisfaction

Customer Satisfaction is a measurement of each customer’s attitudes towards your products, services, and their overall experience.

The aim of measuring customer satisfaction is to find out:

  1. Are your customers happy with your product or services?
  2. What areas can you improve on to make the experience better
  3. Are customers willing to return and/or promote you to friends and colleagues.

The most common and easiest way to measure customer satisfaction is by using rating scales that ask customers to rate a variety of factors from quality, taste, speed, friendliness of staff etc.

Where customers rate their feelings from 1 to 5 or 1 to 10 to measure their levels of satisfaction.

Customer loyalty

Customer Loyalty refers to a customer’s behaviour and how they choose a shop, product or brand over another.

Customer loyalty is harder to measure but is often scored on repeat business and sales. Common ways to measure loyalty is using loyalty cards and frequent user points systems (the ones that offer a free item after so many sold or get points for further discounts).

Quotes

Quotes

Does satisfaction create loyalty?

It is fair to assume if we satisfy customers that they will become loyal and as long as we are satisfying our customers they will be happy to return and buy more. RIGHT.

The answer is NO.

Customer satisfaction does not create customer loyalty.

To explain this lets look at two common myths about customer satisfaction.

Myth 1 - Customers who repeatedly buy from you are both satisfied and loyal.

Just because a customer is buying from you may make them satisfied but does not make them loyal. If you think about it there are many reasons why a customer returns to buy from you, including:

  • The convenience of your location,
  • Your low prices and promotions
  • You have a product they like
  • Your staff are friendly and likeable
  • Someone else is paying the bill

These do not encourage loyal behaviour, instead if these are the main motivators of your customers, this means that your customers see this as a transactional relationship, where they pay for and receive a product or service; where they will return only as long as their basic needs are met, or until they can find somewhere else who meets their needs better.

In much the same way that customers are happy to swap shopping centres to buy their weekly groceries depending on weekly sales.

Myth 2 - Satisfaction scores are an accurate indicator of a customer loyalty

Let’s assume we run a customer survey asking customers to rate us from 1 – 5. The logical assumption is that for every point increase the level of loyalty also increases.

Much like the following graph.

Customer Satisfaction Loyalty Myth

Customer Satisfaction Loyalty Myth

Customer Service Reality

The reality is that satisfying customers is not enough, remember customers have come to your coffee shop, bar or restaurant for a reason. Their expectation is to leave satisfied, anything less would leave a feeling of resentment, anger and even the feeling of being ripped off.

In 1997 Harvard professors Heskett, Sasser and Schlesinger identified that there were 3 zones or levels of satisfaction, which created 3 specific behaviours.

Customer Satisfaction Loyalty Fact

Customer Satisfaction Loyalty Fact

Source: Heskett J, Sasser WE and Schlesinger LA, The Service Profit Chain, 1997

Zone of Defection – (Rating 1 – 3.5 out of 5) - Customers who receive poor and ordinary products and services are in this zone. These customer will rarely complain, leave and then take their business elsewhere. Then they will actively bad mouth and tell others to stay away.

It is estimated that these people will tell up to 12 others about their experiences as well as posting their experience on-line.

Zone of Indifference (Rating 3-5 - 4.5 out of 5) - Here your customers are happy with the product and service, and possibly even the price. They have had a nice experience but they are not ‘wowed’ by it. Customers in this zone might come again but you have lots of competition who are better located, have the same or better variety or cheaper prices.

Sadly, this is the rating most moderately successful businesses receive. Remember customers feel the experience was good but not great, they are happy but no loyal.

Zone of Affection (Rating 4.5 – 5 out of 5) - Your customers love what you do and how you make them feel, they will actively walk further to get to you, promote you to their friends and even be willing to pay more for the experience. These are you ‘raving fans’. 

These are also quite often the smallest group of customers.

What this means for your workplace.

Business need to applaud themselves for getting good customer feedback and satisfaction scores. But they also need to get real about how well they are doing and how their products and services could be costing them sales & revenue.

Remember customers who are in the

  • Defection zone (rating you between 0 – 3.5) are bad mouthing you as we speak
  • Indifference zone (rating you between 3.5 - 4.5) will still shop around.
  • Affection zone (rating you between 4.5 – 5) will love and promote you, but only as long as you keep them feeling this way.

Hints & Tips 

Ways to help build your rating scores include:

  • Focus on being great at a few things not everything
  • Focus on delivering quality and consistency
  • Focus on creating awesome customer experiences
  • Ask customers for feedback often
  • If the feedback is negative ask why and learn from it 
  • If the feedback is positive ask customers to post their feedback on-line so others can find it
  • Always review your online rating scores and share them with the team

What are your thoughts? Do you agree? or Do you have a different perspective? if so then leave your comments and feedback below. 

Ian Johnstone

About the author

Ian is a Sales & Service Coach & Trainer with a background in over 20 years of 5-star Hospitality and Customer Services within Australia, the United Kingdom, and the United Arab Emirates. He works with businesses to consistently achieve great results by designing and delivering interactive, engaging and memorable training programs, tailored to meet the needs of each business, their teams and their customers.

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