During interactions with CEOs, I come across an issue that might be familiar for many of you: The customer satisfaction surveys in the GCC often show most customers rating a brand 4 (on a scale of 1 to 5), and yet sales are dwindling.
The answer to this paradox lies in understanding the difference between customer satisfaction and customer loyalty. Customers may be extremely satisfied with a brand, but that doesn’t necessarily correlate to loyalty. If your customers say they are extremely satisfied, but also buy your competitor products, you have failed to take that extra step to create loyalty.
Customers leave even if they are extremely satisfied for various reasons: A recent study shows that 7 per cent of loyal customers leave giving no reason; 9 per cent develop a relationship with a competitor; 12 per cent leave for competitive reasons (often pricing); 19 per cent leave because they are dissatisfied with the product; and 68 per cent leave because they feel an attitude of indifference from the company/brand.
More than two-thirds don’t feel loved: Don’t brands want to retain customers?
Traditional satisfaction surveys used to assume that a score of 4 is good enough. Often efforts to improve customer satisfaction were focused on the 1s and 2s, learning how to convert them into 3s and 4s. Earlier, researchers thought that if the dissatisfied customers could be satisfied, sales would increase.
It needs to be a 5
Today it is widely understood that in order to increase customer satisfaction and consequently, loyalty and sales, you must focus on what will make the good customers feel loved; in other words, convert the 3s and 4s into 5s.
Experts define customer needs in three hierarchical levels: basic, performance-related and ‘delighters’.
Basic needs are those features that customers have come to take for granted. For example, as a customer you expect that a new car to have four tyres on it with a fifth s a spare. Attributes that satisfy basic needs do nothing to make a customer feel loved.
Performance needs are those from which consumers derive marginal utility – things for which they are willing to pay extra. Power windows, keyless entry and sunroof are examples of features that satisfy performance needs in a car.
‘Delighters’ are those customers who don’t expect but get a great deal of satisfaction because they meet a need they don’t even know existed. Delighters might be enthused by a personalised financial scheme, free service, a collectible, or a pricey keychain when you take delivery of your new car.
I recommend that you identify what your customers truly value and then develop methods to deliver that. Many times you can charge extra for such services that will more than offset your additional costs. The challenge is in determining what customers truly value because they typically are not going to tell you.
Look beyond the details
Returning to the car example, a 43-year-old expat woman buys a popular 2022 SUV, and tells the auto dealer that the features she likes are the high ground clearance, the vehicle size and the longer wheelbase. The benefits she derives from these features are good visibility, extra storage space, all-weather- and off-road capability.
However, few city customers really take their SUV off-road or drive in extreme inclement weather. They are more likely to keep the car garaged and neatly polished than take it on muddy roads. This buyer won’t tell you what she truly values: That the big SUV makes her feel safer from other aggressive drivers on the road, and more independent – makes her feel secure from bikers and cab drivers who otherwise indirectly harass an expat woman behind the wheel.
Surprise the buyer
The delighters in this example would be features that provide the customer with added feelings of dominance and independence. Once you have determined what your customers truly value, develop as many benefits as possible to satisfy those values and let customers choose.
Finally, there exists a tremendous difference between the loyalty of ‘merely-satisfied’ and ‘totally-satisfied’ customers. A small drop in total satisfaction will result in a major drop in customer loyalty and vice versa. To increase customer loyalty, you must understand customers’ true values that are often hidden behind what they initially will tell you.