{"id":693,"date":"2015-01-23T07:54:48","date_gmt":"2015-01-23T15:54:48","guid":{"rendered":"http:\/\/www.gordonbenzie.com\/blog\/?p=693"},"modified":"2019-06-12T10:16:25","modified_gmt":"2019-06-12T17:16:25","slug":"is-there-a-link-between-customer-satisfaction-and-loyalty","status":"publish","type":"post","link":"https:\/\/www.gordonbenzie.com\/blog\/is-there-a-link-between-customer-satisfaction-and-loyalty\/","title":{"rendered":"Is there a Link between Customer Satisfaction and Loyalty?"},"content":{"rendered":"

\"customer_loyalty\"<\/a>Few would argue the importance of customer satisfaction. Every business owner strives for happy customers. In practice, however, what does it mean to achieve customer satisfaction? What makes a happy customer? Are they more profitable? More loyal?<\/p>\n

Fortunately, considerable research has been performed on this subject, which will be quite helpful to address these questions. The first challenge is to understand what is actually going on versus what business owners think is going on. According to Lee Resources<\/a>, 80% of companies say they deliver “superior” customer service, but only 8% of people think these same companies actually<\/i> deliver this type of service. That is quite a perception gap. A big part of the reason why such a gap exists is that most unhappy customers don\u2019t tell you \u2013 only about 4% \u2013 according to “Understanding Customers<\/a>” by Ruby Newell-Legner.<\/p>\n

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Conclusion: for every customer complaint you receive, realize there might be another 25 you\u2019ll never hear.<\/p>\n

Why Care About Happy Customers?<\/h3>\n

Beyond the ethical and philosophical perspectives on why it is important to spread good will to others \u2013 happy customers are simply more valuable, so can add more profit to your business. Selling to an existing, happy customer is far easier than selling to a brand new one. The probability of a successful sale to a new prospect ranges from 5-20% \u2026 that success rate nearly quadruples to 60-70% if a relationship already exists (source: Marketing Metrics<\/a>). Not only does the probability of closing a sale increase dramatically with existing customers, but the cost to sell to new customers is significantly higher \u2013 about 6-7 times greater. Lastly, about 91% of unhappy customers will not willingly do business with you again, which ultimately will shrink the pool of prospects you can sell to (source: Lee Resources<\/a>).<\/p>\n

From a public relations or brand awareness perspective, happy customers tell better stories to their friends, co-workers, and others. Anyone who has tried to get an unhappy customer approve a case study knows what I am talking about here \u2026 it just doesn\u2019t happen.<\/p>\n

Author Pete Blackshaw<\/a> suggests that happy customers tell their stories to three friends and that angry customers tell 3,000 \u2013 at least in today\u2019s<\/i> world of social media connectivity. As it takes 12 positive experiences to make up for one unresolved negative experience (source: \u201cUnderstanding Customers<\/a>\u201d by Ruby Newell-Legner), one negative experience can ruin a good relationship. The only one who will be happy when you deliver poor customer satisfaction is your competition. About 3 in 5 Americans (59%) would try a new brand or company for a better service experience (source: American Express Survey, 2011<\/a>).<\/p>\n

So What Makes a Happy Customer?<\/h3>\n

It turns out, a lot of happiness can be gained (or lost) each time an interaction occurs between your company and its customers. According to Matthew Dixon and Brent Adamson in their book \u201cThe Challenger Sale\u201d (see page 47), they explain that customer satisfaction (i.e. happiness) is not the primary driver of customer loyalty:<\/p>\n