2Europe provides a comprehensive market research survey article and newsletter archive which includes Market Research topics such as Marketing Strategy, Brand research and Awareness Tracking, Customer Satisfaction surveys and more. We hope you find them of interest and if we can help with a subject you are researching please don't hesitate to give us a call: 01442 831711
Search our Article Bank
Just fill out the form below to start searching our Article Bank
Customer Satisfaction, Retention And Loyalty
Existing customers are essential to any organisation's business development initiatives, particularly when you consider that it costs several times more to acquire new customers than to retain existing ones.
Today, customers take it for granted that their suppliers have excellent products & services with reliable service & support. To gain customer satisfaction, loyalty and hence future value, we have to go beyond this as customers are looking for additional drivers to give them a reason to continue dealing with a supplier.
The supply of money is relatively easy - you can borrow you can sell stock. However, value comes from customers and their supply is limited; after all you can't just go out and buy new customers.
Customers create value through their future purchase intentions. The solution to develop value is relatively easy - by creating processes and a company culture that enables employees to concentrate on acting in the customers' best interests. This means that each challenge starts with "Now what does the customer want in this situation, what is best for him or her?" The bean counters will of course take the short-term view of asking what it is costing.
However, really great organisations see past the barriers and empower employees to solve problems and act in the customers' interest - they recognise the long-term goal of creating long-term customer value.
From a recent 2Europe survey it is evident that if the customer thinks recommendations are based on what they need rather than what you have to sell, then you develop trust and they will want to do more business with your company. Organisations are now beginning to realise the importance of Trust as an attribute and that earning the customers trust places them high on customers agenda.
The Challenge
Existing customers are essential to any organisation’s business development initiatives, particularly when you consider that it costs several times more to acquire new customers than to retain existing ones. Today, customers take it for granted that their suppliers have excellent products & services with reliable service & support. To gain customer loyalty, we have to go beyond this as customers are looking for additional drivers to give them a reason to continue dealing with a supplier.
The Solution
2Europe runs satisfaction and loyalty programmes for its clients across 20 countries and over the last decade has specialised in all aspects of loyalty research. Our aim is to provide knowledge and answers to resolve customer satisfaction and loyalty challenges. This enables clients to develop profitable strategies to improve customer loyalty and increase customer return on investment.
“Provides programmes to assist in the resolution of business problems related to satisfaction” LOYALTY
“The independent specialist” MANAGEMENT TODAY
Successful organisations monitor their customers’ attitudes towards and perceptions of the products & services they deliver, benchmarking their performance against the competition to ensure they have no weaknesses. The information they gain proves a valuable competitive tool to guide operational improvements; recognise and leverage strategic advantages; anticipate customer requirements & potential issues and identify potential weaknesses.
Customer satisfaction sets the balance between customer priorities, company and competitor performance. Our process presents information at 3 levels. At the top strategic level we have a ‘customer satisfaction index’ for a company, which guides change in those directions, which improve customer satisfaction.
The next level derives a Relative Customer Satisfaction Index for each company function or process (compared to the competition).
The final operational level then evaluates customer priorities and both company & competitor performance, for each of the key activities within customer facing functions or processes. The management grids identify the action required for each activity.
Customer Value
Customers often provide high satisfaction scores but still buy products and services from competitors if they consider they will gain additional value. A high customer satisfaction score on its own is therefore no indicator of customer loyalty.
The customer value model considers a price/quality or performance trade off for each competitive brand (or sector of your company).
Brands below the diagonal are at risk.
Customer Loyalty
It is more critical than ever for companies to focus on loyalty as well as satisfaction. Loyalty means continued business and this drives revenue. Keeping customers loyal, relying on them to refer your business to their friends and colleagues is good business. Customer loyalty is evaluated in terms of propensity to continue with the current supplier and attitude towards recommending.
Influence of Brands on Customer Loyalty
Customers make decisions on numerous dimensions and even after we have gained customer satisfaction at a physical level there are buying behaviours that appear more emotive than rational. In this instance we turn to the brand. A powerful influencing factor in purchasing habits is the subtle, often-overlooked brand, which has a "relationship" with loyal users not unlike a healthy relationship between two people.
To build a strong brand relationship, you must first understand the core values of your target market. In marketing, we often talk about this as "laddering up to emotional end benefits." These are the unspoken customer values that are the glue to brand loyalty because they validate the user's self-perceptions.
We also need to know where the competition is in this emotional terrain.
Segmenting Customers By Loyalty
Customers are individuals and ideally need to be treated as individuals however, if a company has hundreds or many thousands of customers then individual attention proves a significant challenge. An alternative approach is to segment the market by monitoring Satisfaction versus Loyalty, and to then serve each segment according to its needs.
The four basic segments are:
- Loyalists. Those who have high satisfaction and high loyalty. Sub-segments are Apostles, who have the highest satisfaction and loyalty scores, and Near Apostles, who give high ratings for both, but at a slightly lower level.
Defectors. Those who have low satisfaction and low loyalty and who may broadcast their disgruntlement to others.
Hostages. Those who have low satisfaction, but high loyalty. This is typically due to lack of competition or high cost of exit.
Mercenaries. Those who have high satisfaction, but low loyalty. These are the customers who are highly price-sensitive and will switch easily
- Customer Loyalty Index is a corporate target for MD's, CEO's or General Managers based on satisfaction levels, propensity to recommend and repeat purchase
- Indices are targets for functional or process heads
- Key performance indicators are the activity level for the operational staff
- Ad Hoc targets can be aimed at any level in the company but generally at operational staff and are concerned with tactical challenges that affect customer loyalty
Search our Article Bank
Just fill out the form below to start searching our Article Bank
