While customer satisfaction is necessary to any success business, we are learning that satisfaction alone is not enough to build a loyal customer base.
Since the 1980's customer satisfaction has been the watchword for business. Everyone was rushing around to find ways to make customers happy by meeting and exceeding their expectations.
The theory was that if customers were satisfied, they would buy more and do so more often. Books, articles and seminars touted such buzzwords as customer profiles, customer service and service excellence. Behind all the buzzwords was the belief that customer satisfaction produces positive financial results, especially in repeat business.
Yet the latest research findings suggest otherwise: High levels of customer satisfaction do not necessarily translate into repeat purchases and increased sales.
That is the opening paragraph from marketing consultant Jill Griffin's groundbreaking book CUSTOMER LOYALTY: How to Earn It. How to Keep It.
Her guide on how to turn prospects into customers and customers into loyal advocates has earned the praise of such well-known names as Stephen Covey and J.D. Power III and is the foundation of the 10-part series, Customer Satisfaction Management (CSM) 2000.
Don't be misled that CSM 2000 is just an update of Customer Satisfaction Management, an earlier series that appeared on ASTN. This series has a totally new message. And this is from me - someone who was one of the major proponents that customer satisfaction equaled repeat business. I was w-r-o-n-g.
Just consider these studies:
Forum Corporation reports that up to 40% of the customers in its study who claimed to be satisfied switched suppliers without hesitation.
Harvard Business Review reports that between 65% and 85% of customers who chose a new supplier say they were satisfied or very satisfied with their former supplier.
Dr. Peter Zan Dan, whose company Intelliquest conducts market research studies for computer manufactures worldwide, reports that in 30,000 interviews, his company has never found high levels of customer satisfaction to be a reliable predictor of repeat purchase.
Research conducted by the Juran Institute reveals that more than 90% of top managers from more than 200 of America's largest companies agree with the statement, "Maximizing customer satisfaction will maximize market share." Yet, less than 2% of the respondents were able to measure a bottom-line improvement from documented increases in levels of satisfaction.
Don't get me wrong. Customer satisfaction has not gone out of fashion. It's as important as ever. But it is only the first step toward more repeat and referral business. All good dealers today garner high CSI scores.
Better service, improved product and aggressive follow-up has ensured high CSI scores. That's why loyalty has replaced satisfaction in the eyes of many manufacturers.
It is no secret that there will be fewer dealerships in the coming years and that manufacturers are closely monitoring each dealership's percentage of repeat business. The industry average is around 20%. That's two repeat customers out of every 10.
What is it at your dealership...30%, 40%, 50%?
Or maybe 10%? Do you even know? That's why I hope you watch CSM 2000 and learn how to earn and keep loyal customers.
Remember: Customer satisfaction is just what people say. Customer loyalty is what people do. As in buy again and again and . . .
Steve Walker was a television news reporter, anchor and executive producer for 12 years before joining ASTN in 1988. He has written and produced over 36 ASTN programs on Customer Satisfaction Management. "CSM 2000: Customer Loyalty" is Mr. Walker's most recent and timely series. Contact him at [email protected].