Does "Customer Satisfaction" Improve customer's loyalty, so as to stimulate the realization of customer value? As per the survey on customer's satisfaction and loyalty in various industries, the linear relationship is not always available between satisfaction and loyalty. When the customer is satisfied, both loyalty and satisfaction are quickly enhanced, thus improving customer value; while when the customer is not satisfied, the change of loyalty does not synchronize with that of satisfaction. In fact, both loyalty and satisfaction are influenced by other correlative factors.
The degree of correlation between satisfaction and loyalty is not the same in the different industries due to the discrepancy of product attributes, competition and availability of products & services. Particularly, the degree of correlation is relatively low in the fast moving consumer goods industry and monopolized industry owing to the limits on brand propagating, retail channels and resource control, while the degree of correlation is higher in such fields as durable consumer goods and luxury goods. Even for the same industry, the correlation between satisfaction and loyalty is different due to different resources and competitive strategies employed by the enterprises.
According to the above analysis, it can be concluded that the improving of satisfaction may not always promote the customer value. Relevant value is unavailable for the enterprise until the satisfaction is changed into loyalty. However, customer loyalty is affected by customer satisfaction, discrepancy of products/services, customer relationships and market competition.
So, how to change customer satisfaction into customer loyalty, and then solidify this loyalty?
Method I: Blue Ocean Strategy
Even for the manufacturers in the same industry, different demands will be raised by the customers for related product’s function and quality. There are different requirements for function and feeling in the different segment markets. Therefore, the enterprise could learn about the potential and unsatisfied demands from the customer via following methods, so as to improve the product and create the Blue Ocean market for itself.
1. Conception analysis: the conception of relevant products is defined and evaluated via symposium and interview.
2. Test on demand: the potential demand could be evaluated on the basis of questionnaire and interview.
3. Observing and experiencing: consumption experience could be simulated through participation in customer's buying and purchasing, so that the existing products could be improved.
Method II: Custom-made service
With the globalization and the general adoption of market principle, the enterprises attach importance to service as well as takes different measures to increase the added value of products such as three-guarantee service, after-sale review and VIP client.
For the enterprise in the Red Ocean, satisfaction analysis, customer's expectation and customer classification could be adopted to ascertain the major service-improving points annually. Also, the different loyalty plans could be made for the customers with different values, so as to determine the custom-made service for the important customers.
Methods III: Standardized procedures
Besides products and services, the enterprise shall sort out the existing customer relationship and control-related procedures, which cover sales, after-sale service, customer's complaints, brand propagating and channel control, so as to ascertain the key points.
Focused on the major points with which the existing customers are unsatisfied, particularly the customers with high value, the enterprises could make improvement according to the related procedures control. Also, the procedures shall be standardized and modularized. Thus, the enterprises are assisted to avoid the blind angle of management. The existing problems could be solved and improved by the relevant departments.
Methods IV: Indices-based examining
For the loyalty control, such key factors as customer satisfaction, customer attrition rate, customer’s life cycle and customer attrition warning could be brought into the examining system according to the enterprise's actual conditions.
Moreover, the independent survey company could be introduced to collect the neutral and authentic data as well as set up the closed-loop examining, so that the operation efficiency could be improved on the basis of examination.
Methods V: Employee’s satisfaction
As the loyalty control is carried out, the satisfaction of internal employees is always neglected. The employees with high degree of satisfaction could offer more efficient products and services. The enterprise could adopt the people-oriented corporate culture, personal performance compensation system, employee's satisfaction survey, incentive plan for outstanding employees, training and development to improve the employee's satisfaction.
Methods VI: Standardized management
The appropriate management system shall be established by the enterprise for loyalty control, such as management structure for customer satisfaction & loyalty, procedures for relevant data collection, evaluation system & methods on customer's satisfaction & loyalty, evaluation on customer's life cycle & value and customer attrition warning. The standardized loyalty control process could create a good management basis and guarantee the quantification and feasibility of related decisions.
Methods VII: Centralized data
The basic, dynamic and integral data are demanded for loyalty control. Therefore, the enterprises shall set up open database and data exchange mechanism, so as to realize the sharing of key data such as consideration of sale, satisfaction, loyalty and churn rate. The centralized data are favorable to the data collection and formulation of strategy.
Author: Jack BIE, Research Manager, Marketing Research Services, Sinotrust
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