WHNetwork Blog

Loyalty:

1. a feeling or attitude of devoted attachment and affection.
2. the act of binding yourself (intellectually or emotionally) to a course of action.

Satisfaction:

1. an act of satisfying; fulfillment; gratification.
2. the state of being satisfied; contentment.

How do we build loyal customers?

Customer "loyalty programs" have been growing like wildfire since the 80s. Buy 10 coffees, get the next one free! And did you know that over 75 percent of consumers in the U.S. now belong to at least one loyalty program? But do customer loyalty programs bring you loyal customers? What are termed "loyalty programs" are really nothing more than frequency schemes: they may bring you frequent customers, but that is not same as a loyal customer, is it? And if a loyalty program does not ensure loyalty, what does?

Is it customer satisfaction?

Customer satisfaction is just that, a customer's sense of satisfaction; a measure of expectations being exceeded, met, or not met. That's it. We want to believe that if we have satisfied customers, that this will lead to their loyalty and improve revenues. Unfortunately, customer satisfaction can have little to do with customer loyalty.

Satisfied customers will stay with you until there is a better alternative – even if their expectations are met or exceeded! When ex-customers are surveyed, they typically reveal that they left because they received a better offer, and they did not feel committed to the prior company. In other words. there was no emotional investment or connection. However, loyal customers will stay with a company through thick and thin. The mistake we make is confusing loyal customers with satisfied customers. Much research over the years has indicated that there is no connection between customer loyalty and customer satisfaction. Just because a customer indicates a high level of satisfaction does not mean that they are, or will be, loyal to you. True customer loyalty entails an emotional connection.

You have to embed yourself in the heart and mind of that customer.

Next week, part two: How to create an emotional connection with your customers.

Be a part of the discussion! How have you created a connection with your customers? Let me know!

-Margie

Comments received:

Excellent topic! We thrive in our industry on providing outstanding customer service. Only when you anticipate the needs of a customer can you meet or exceed their expectations. When that happens, you've created a loyal customer. I travel quite a bit as a result of my job and rent cars in all my destinations. First out of habit and convenience rented from a company that was located not too far from my house so I could drive to my destination without putting miles on my vehicle. Every time I did this they would inquire about my trip, whether personal or business. They were able to establish my needs by asking specific questions. Now when I rent a car, they ask me if I am going to visit my family or driving to meet customers; they know if I am visiting family it involves kids, spouse and dogs (in case of hurricane evacuations, cats too) and they automatically put me in a large SUV. They provide me with discounts when available without me having to ask. When driving to visit with customers they at times upgrade me to a better vehicle knowing my company will only reimburse me at a certain rate. These simple touches have made me a loyal consumer and I now refuse to rent from anyone but them especially when traveling out of State or Country; they give me a feeling of security. I take this approach with my customers as well. I try to find out the key attributes they look for when considering hotels and make sure we are able to meet their expectations. You have to live by the golden rule essentially, do unto others as you would have them do unto you. Every time I encounter a situation in customer service, I ask myself, how would I feel if it were happening to me and what can I do to turn this situation around,

Truly care about them and they will in turn reward you with loyalty.

Dell Rosepink
Senior Sales Manager - Business Travel at Renaissance Houston Hotel
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The simple answer is not at all.

People can love the food, love the service, love the ambiance, but never return.

The internet in some ways has a lot to do with that, with communities like Chowhounds and Yelp that move trendy groups 'foodies' and tourists for the flavor of the month and move on after a time... this may be more of an urban thing?

But it does speak to a certain crowd that greets openings with much vigor and buzz, follow the reviews that occur @ 3 months in, and then move to the next big thing once they see that their spot has been discovered. In that case the dissatisfaction occurs because of the success of the business... go figure...

How a restaurant plans for this shift is key to that crucial 6 months to a year after opening.

Moaya Scheiman
Teaching Chef, Ramekins Cooking School
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Nice discussion on a complex subject....To add to these views, you may want to look at the Net Promoter Score which basically uses one question to determine if a customer would be loyal to your brand, - "Would you recommend us to a friend or colleague?". The NPS is a complete 5 element business discipline to focus your entire company on improving the customer's experience of your product or service. There is a lot of info on this subject available on the web.

One of the biggest challenges facing Restaurant and service companies, is how to obtain the customer feedback cost effectively in real time and then enable your business to respond to any issues raised in a timely manner, possibly immediately. Touchwork has recently launched a real-time Customer Feedback and Service Recovery system for the restaurant and hospitality industry in the USA and Canada. It is called Txtandtell and uses text messaging via cell phones. The customer feedback results are provided to the restaurant management in real-time, enabling them to address any poor performance issues immediately. See more info at: www.txtandtell.com.

Carl Mostert
Chief Operating Officer at Touchwork
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Loyalty starts with the people who represent the brand. Once a customer makes contact with the person selling the brand and has a good experience; customer loyalty starts from that point on. Some marketing guru came up with an idea to overshadow poor operations and/or business practices and called it customer loyalty. Hence hire good people who make connection with the customer and you will have the starting base for customer loyalty.

John Clark
District manager at Panera Bread
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Great points!

1. Loyalty is all about building relationships and the emotional experiences that build and solidify them.
2. Experiences are built on increasing trust and adding value at each customer touchpoint while at the same time increasing the emotional appeal of that touchpoint.
3. You can't buy loyalty through frequency schemes or discounts - period!
4. When you embark on a customer loyalty initiative(s) your only competition becomes yourself. This is innovative and differentiating.
5. Focus on increasing the emotional appeal of your existing touchpoints and then look for ways to add more to more touchpoints by mapping your processes and touchpoints.

Jeffrey Summers
Owner, Restaurant Coaching Solutions
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Satisfaction comes from your customer's expectations being met. Loyalty is created through a meaningful relationship between you and the customer. A "buy 10 get one free card", even though it might be part of a "loyalty program" should not be confused with real customer loyalty.

Jason Kucherawy
Owner / Recruiter at TO Recruits
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I agree, from an agent's perspective (mine in specific) I go the extra mile for my clients, and always have a warmth in my voice, smile on my face and always remember to talk with the client instead of at them. I ask about their wants, needs and requests and write down the small details (like a birthday or anniversary) and send them cards. It is the attention to details like this that will keep a loyal customer - they become part of your extended family.

Susan Ormesher
Leisure Agent for Travel Connection
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I think customer's are never loyal to any one particular brand, I do know one big MNC bank employee's when traveling for their official trip they chose the best one But when it's a personal trip they cheapest one. It's entirely depend upon how we define customer satisfaction & loyalty, to some it's different but for me it's same. To make customer loyal he should be satisfied with the product by making it CHEAP & BEST (with service)

Riyaz Muhammed
Manager at Akbar Travels of India Pvt Ltd
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I agree with you that satisfied customers will stay with you until the next best thing comes along. To build customer loyalty you have to have a personal relationship with the customer, build trust, go the extra mile and service above and beyond.

Mary Stephan/Travel
Luxury Travel Consultant, Concierge, President of Allons Travel
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I believe that the use of “Loyalty” in the nomenclature that refers to the Buy 10, Get 1 Free Program or those similar to that is a misnomer. These are simple value oriented programs.

I believe that it is possible to build true Customer Loyalty without providing an incentive of sorts; simply deliver on the value proposition, on a consistent basis. One can build customer frequency without couponing or other frequency programs by delivering the expectation.

Hence, Customer Loyalty, as defined in the more appropriate manner, is in fact connected with Customer Satisfaction.

Paul G. Tuennerman
Vice-President Business Development at Raising Cane's, LLC
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Excellent topic.

I had a discussion about this with a boss of mine, years ago. He always said he was from the "old school" and he would patronize establishments, just because his parents had before him and on and on.

I remember he had a problem with one, but kept going back out of "loyalty."

Someone else I knew did this with a professional relationship (accountant or lawyer); even though they disagreed on many occasions, this friend kept going back "because I'm loyal."

I worked in travel for a number of years. It always seemed to me, it was difficult, sometimes, to get customers to be satisfied. If it wasn't a pricing issue, it was a scheduling issue, or something.

On the loyalty front, you'll still get people to fly certain carriers, so they can get frequent flier credit, but there are some, who will change planes, for example, several times, just to save $20.

Loyalty and satisfaction are different, yet it is up to interpretation. They could be the same and probably should, but many don't see it that way.

Keith Bernhardt
Field Representative, United American Insurance
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From my perspective, the key to loyalty is in a simple question...Would you recommend us to a family member, friend or someone you work with? If the answer is yes...loyalty builds...

Mark Brownstein
Operations Partner/COO, Panera Bread
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This is a topic that highly interests me. How to turn a customer into a satisfied customer, then a loyal customer, at last an advocate. I came across a rather enthralling and inspiring book that I recommend:

The Experience Economy: Work is Theatre & Every Business is a Stage
by Pine & Gilmore

They say that "It's the value that the experience holds for the individual that determines the worth of the offering", that is, more than lowest possible prices, high quality products or services is the experience that the customer had that will prevail in his mind. At all times we should be staging an experience for our audience = customer.

Cristiane Carvalho
Independent Leisure, Travel & Tourism Professional
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From a marketing perspective, we can apply all of the tools to acquire, retain and reward customers, but once they get in the door, customer satisfaction takes over. You can lead a horse to water, but you can't make him drink.

Joe Welsh
Director of Operations, Total Loyalty Solutions
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As Director of OD & Learning at two hospitality companies, banking, and publishing, I have led the creation and strengthening of service excellence cultures. To attain high customer loyalty, the company has to have a strategic plan around service and service leadership; and, it has to have competency-based, integrated HR processes and systems that reinforce the goals of service excellence and service leadership. These systems include: selection, on-boarding, training, leadership assessment and development, recognition, rewards - compensation, bonuses, and incentives, vision and values / service culture, performance management for accountability, metrics and feedback, and strategic organizational communication...all focused on those competencies and behaviors that foster the desired outcome of customer loyalty.

Shirley Anderson
Consultant - Owner at Options OD Consulting
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I believe that customer satisfaction contributes and weaves into customer loyalty but it is not necessarily the same thing. Trust is a major component of loyalty. If a customer trusts a company to always provide the best product, product knowledge, service, and price then they will start developing loyalty. Another factor to consider when developing loyalty with customers is their generation. I've recently studied the next gen or millenia traits and in the workplace, the millenia generation feels loyal to their immediate supervisor not necessarily the company. Does this trait also apply to their buying tendencies? Are they loyal to a specific service agent but not the company? It would be interesting to understand the generations, their thoughts on loyalty, and their buying tendencies toward loyalty.

Glenna Wood Black
Owner, Those Two Ladies
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After 6 years pouring wine to thousands of wine tourists I believe the single most important thing a tasting room employee can do is acknowledge the customer within 30 secs of arrival.

No matter what else you are doing, stop and say "Hi, I'll be with you soon." Or better simply offer the first pour then finish your other biz.
See example: Bad manners. http://www.oregonestatewines.com

Yours in Wine,
H. Bruce Smith
www.owct.us
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A loyal customer will come back but a satisfied customer may still go somewhere else next time.

Hank Lien
Sales Manager at HOP
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Loyalty in customers is something that is actually more subconcious than an active thought. Loyal customers will think of your place first. We all have locations that we are loyal to, and we may not even think that we are loyal to them. In reality, we are loyal because we keep going there first when we need what they offer.

What defines loyalty?

1. It is the first place you think of when you want that particular product. For example, when I want an electronic gadget of any kind, the first place I think of is Best Buy. I wind up always looking there first.

2. It is the place you recommend to others when they want a particular product.

Loyalty to a location does not mean you will not shop or dine at another place. It just means it is your "go to" spot.

So what makes one loyal to a place? I think it is a complex iusse based upon a variety of factors. Here are the factors that I believe play into customer loyalty.

1. Convenience. A customer cannot remain loyal to a place that is hard to get to. Sometimes convenience comes from being the closest location. Sometimes it comes from being close to other important shops (the value of being in a mall). If a location is inconvenient the customer will not keep coming back.

2. Atmosphere. Your customers must enjoy being in your store. That might come from store design, store entertainment, attitude of employees, or any other issues that help customers enjoy being in your location. If customers don't enjoy being in your location, they will not keep coming back.

3. Perceived Value. It is not about the lowest price. The customers must perceive that they are getting good value for what they are paying for. If the customer does not perceive enough value in your products they will stop coming back.

In my example of Best Buy above, they provide all three of the above for me. The Best Buy store is very convenient for me to get to. The funny part is that there is actually two Circuit City stores that are closer to me, and perhaps even more convenient. However, Circuit City is not providing the other two factors. Best Buy has done a better job at creating a fun environment. Circuit City has attempted to catch up, but there is something that seems to be missing that Best Buy has managed to capture. The funny part is that I think the service in Circuit City is far superior to Best Buy. I can get help easier in Circuit City and I don't have to wait in line as long.

Finally, there is the perceived value. I have historically found better pricing at Best Buy than Circuit City. The items are the same, but the pricing seems to be better at Best Buy.

To build loyalty a customer must have all three points. If you lack any one of these points, you will have a hard time building customer loyalty. They may still shop or dine with you, but they will not be loyal. You will not be their first option and they may not recommend you to others. As you can see, customer satisfaction does not play into the equation at all.

Kevin Lynch
Chief Executive Officer, P&L Industries LLC
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I dislike buying anyone's loyalty. However, I try to earn it via fantastic customer service, consistency. If a promotion is available, send it to loyal customers first. Otherwise, keep it away from me, please.

I can't tell you how many times I've seen "loyal" customers / guests only when they have discounts and coupons in their hands, with no further interest in creating an experience, killing guest check averages in the process. No thanks.

There are far more creative ways to retain loyal guests and customers besides cheesy half off entree cards or whatever.

There is a restaurant in downtown Seattle that has been destroyed because of so called Loyalty / VIP programs.

Again, no thanks.

Gene Dexter
Agent at www.GeneDexterHomes.com
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Once you take your eye off 'customer satisfaction' and focus on 'customer elation' your customers will become loyal.

Like the restaurant business itself: it is simple but not easy.

Gregory Pyne
Chief Operating Officer at Mariner Holdings LLC
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Loyalty and satisfaction are somewhat connected but can be exclusive too. I heard a story on NPR about this using Whole Foods as the example. Whole Foods got a VERY high, almost 100%, satisfaction rating. But when it came to loyalty it scored very low. We are in an economy where being well serviced does not mean you will pay more. But here it is where it gets interesting - and I do not think I am alone in my point here.

I will go to Whole Foods for Meyer lemons or some nice fresh shellfish cause I cannot find them anywhere else but I am not buying my dog food from there. I don't care how natural it is and neither does my dog.

On the flip side. If I am traveling to a town that only has one Starwood property and it is a broke-down Sheraton (like most Sheratons these days...) I will stay at it anyway because I am a loyal SPG member and I know that a bit of a sacrifice this trip will pay off later when I am in a posh Westin and get an upgrade.

Will McKee
Director of Marketing at MedjetAssist
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No, it's not the same thing.
Customer satisfaction will LEAD TO customer loyalty. Both are extremely important when pursuing a relationship marketing-approach.

* Satisfaction results from an emotional state. Causes of satisfaction differ widely between individual customers. Expectations about the product / service also influence satisfaction.

* When a customer feels like their emotional needs are met, and their expectations are met with the use of the product / service, it may lead to loyalty.

Satisfaction alone does not guarantee loyalty. Loyalty consists of a few elements, such as:
Satisfaction + Trust + Commitment = Loyalty (Little: 2003:49)

"A business that focuses exclusively on customer satisfaction runs the risk of becoming an undifferentiated brand whose customers believe only that it meets the minimum performance criteria for the category. Long term customer retention in competitive markets requires the supplier to go beyond mere basic satisfaction and to look for ways of establishing loyalty that will help ward off competitor attack." ................(Clark 2001:160)

Riana Coetzee
Honours Student in Tourism Management at North West
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I agree that there is no perfect loyalty. Business is not a marriage so one should understand that even "loyal customers" may cheat on you with different alternatives and still be frequent and satisfied.

For being loyal as a customer, there are several reasons: there is either a contract or good will (we live in a world of alternatives). The customer can be loyal, because they have little time and do not want to risk looking for a better alternative + there always is some predisposition for a loyal customer behaviour (some people are more loyal by nature than others - if the seller gives you good reasons for such feeling, it's pleasing to "be called loyal", "feel loyal" - such things grant us a sort of security.

You cannot make somebody into a loyal customer and there is no equation for something so individual and possibly volatile like loyalty. It's too strong a statement IMO.
You have to find the balance between care (wanting what you think is good for them) and respect (for their choices). On top you should give them competitive prices such that you would buy your product yourself (basic thing). Spicing it up with bonuses helps.

Perfectly loyal customer is the ideal creature who has tried various alternatives and now, it's not worth of his/her time to try anything else any more.

Tomas Zukal
Chair/director, StayPoland
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We decided to own our own restaurant because we consider eating out in a special place as a mini vacation. It is a short get away from routine, where everyone is happy, where it smells good, feels good.....and we wanted to do the same. We have learned about customer loyalty in many ways from our customers. They tell us what they like. They like the cozy, bistro feel....."don't take that away by "sleeking it up"....they like certain things on our menu....."don't take off the scallops...." so we truly consider what they say. We are constantly trying to reinvent to draw new customers while maintaining a balance and keeping the culture and relationship with a large customer base we have earned over six years that we consider our roots. I think managing between customer satisfaction and customer loyalty is leaning about how to keep the balance!

Nancy Gorshe, Owner/Manager
The DEPOT Restaurant, Historic Seaview, Washington
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What a great topic! I feel that there are a combination of factors that have to come together in order to get customer loyalty.

Customer Service, customer care, satisfying needs and exceeding expectations are some of the things that have been mentioned and of course play a big part in customer loyalty.

I feel that you have to firstly identify where you sit in your 'market' and what you are able to offer your target audience and how you can service their needs?

I have moved out of the Travel Industry and currently work in a very competitive and aggresive UK Recruitment Industry and can honestly say that we have clients who use us again and again to source successful applicants for their vacancies - of course they use competitors as well, however it is our responsibility to ensure that we source the right candidate to match their description and to provide and exceed the service promised at the negotiation stage. Even though we are not the cheapest in the market, we hope our dedication to satisfying their needs is apparent and this is how we hope to retain our clients.

At the end of the day it is human nature to look elsewhere because all of us like the buzz of getting a deal, however ultimately it will always come down to customer satisfaction could bring customer loyalty (in an ideal world, however is not always the case as we all know). If the client feels they are not getting a fair deal they will not come back to you; what everyone has to do is put themselves in the clients shoes and ask 'Am I happy from what this company/ individual has done for me and would I go back again?' If your genuine answer is 'yes' then you should have customer loyalty.

Michael Pagalos
Business Consultant at Select Appointments