Nearly all of our customers conduct a customer satisfaction study. Some deploy both relationship and transaction-based studies. One question that we often receive has to do with the discrepancy between the number of customers saying they are satisfied and the number of customers who engage in loyal behavior. It is not uncommon to learn that while many of your customers are satisfied, they may not necessarily be loyal; that is, your company isn’t necessarily their provider of choice, nor a company they recommend. Yet, customer loyalty is an important measure of business health.

It is wise to be concerned because the research suggests that loyal customers are going to repurchase at two to four times the rate of purely satisfied customers. They’re going to enthusiastically recommend your company to others, are also willing to pay more for your services, and will be the first to try your new products/services.

How to Improve Customer Loyalty Among Satisfied Customers

Some of the suggestions offered by Dr. Mark Royal of Korn Ferry Hay Group, who conducts the annual research with Fortune magazine to identify the World’s Most Admired Companies, provide insight into how you can improve your customer loyalty. According to the research, the factors that determine whether satisfied customers will become loyal ones are the outcome that customers experience, whether it’s a product or service, and the process by which they receive it.

Here’s an example we can all relate to that conveys these factors: buying a car. When we go to purchase a car, the car we buy might be the most wonderful car, so the outcome is positive. But we may decide not to return to the dealership we bought it from for service or the next car because the process of making the purchase was hard or painful. In this instance, the process was negative. This is why service quality plays such a pivotal role in customer loyalty.

According to the research, about 85 percent of customer loyalty leaders are fanatical about measuring loyalty. They focus their measures on what matters to the customer. These companies regularly check the pulse on their customer base’s loyalty as many as two or three times a year at critical junctures in the relationship, so they can act quickly on issues that arise.

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Increase Customer Loyalty By Knowing What Matters

You want loyal customers? First, you need to know how your customers define success and their expectations. The answers to these questions should be the starting point for your loyalty research. Some of the questions you want to ask and monitor that will help you gain insight into whether your customer loyalty is improving include:

Are our company’s products or services having a positive impact on your business?
Do you believe you are receiving a strong return on investment?
A quality rating for both the products and services.
A rating on how easy it is to do business with you.
A rating on how much they want to work with your people?
A rating on how much your people embody responsiveness, integrity, trust, and professionalism.

Investing in customer loyalty is a long-term commitment. For any initiative to have staying power, we recommend you take the following course of action.

Incorporate customer loyalty into your strategy and your mission statement
Involve employees, customers, and managers in the process and action plan
Measure and monitor your loyalty on a regular basis
Demonstrate quick resolution to customers’ issues and concerns
Hold employees accountable
Set customer loyalty targets.

FAQ:

Q1: Why aren’t all satisfied customers loyal?
A: Satisfaction and loyalty are distinct. Satisfied customers may still choose competitors; loyalty means your company is their preferred provider and the one they recommend.

Q2: Why is customer loyalty more valuable than satisfaction alone?
A: Loyal customers repurchase at two to four times the rate of merely satisfied ones, refer others, pay more, and are first to try new offerings—making loyalty a key driver of business health.

Q3: What factors turn satisfied customers into loyal customers?
A: Two:

The outcome (results from your product or service)
The process (how easy and positive the experience is)
A great outcome with a poor process erodes loyalty.

Q4: How do leading companies measure and manage loyalty?
A: They measure loyalty two to three times a year at key moments, focus on metrics that matter to customers, and act quickly on feedback.

Q5: What questions help assess and improve customer loyalty?
A: