Satisfaction Versus Loyalty

Customer satisfaction scores for the majority of large corporations have not historically shown significant improvement. Although annual reports highlight the importance of customers (usually accompanied by glossy phoos and glowing tributes), many CEOs, when interviewed, have expressed a lack of confidence in their customer satisfaction efforts or a disregard for the programs that exist. Billions of dollars a year are spent on customer satisfaction surveys and market research, and outcomes seldom seem to result in any real changes to the business. Consider your own experiences as a consumer. When you fill in a customer satisfaction survey, do you believe that something will happen as a result?

Research can be valuable for the organization, but viewing your investment in customer loyalty as a research project is setting your efforts up for failure. We unfortunately continue to witness the stereotypical annual customer satisfaction report, presented to a suspicious executive team that invests just enough time to argue its validity before consigning it to the corporate bookshelf for another year. This is the classic outcome of a program that is driven from the needs of research rather than the needs of the business.

It’s worth clarifying the difference between satisfaction and loyalty. Simply put, satisfied customers still defect. The fact is that satisfaction is a standard that had great meaning in the postwar industrial growth of Europe and the United States but falls short against the standards of global hypercompetition today. Worse, it provides a false standard thatundermines the impact that leadership could obtain byapplying a higher standard to their businesses.

If you turn on your TV and see a company claiming to have 90 percent customer satisfaction, what does it tell you? It certainly indicates that the company’s basic products or services seem to work as advertised. It might also suggest the company is able to handle inevitable problems in a reasonable and timely fashion. You might even suppose that this business’ help desk phones are not clogged with customers calling in to complain about the company. But does any of this sound like a basis for competitive advantage or an engine for growth?

Net Promoter programs establish a higher standard than simple satisfaction, one worth holding your business to. There is no false sense of comfort, just a real focus on the drivers of growth and competitive advantage.

Dell, the world’s largest direct-sale computer manufacturer, runs a global customer experience program and understands the distinction between satisfaction and true loyalty. Dick Hunter, who heads the global consumer support program, told us:

The thing I was struck by is that we were all hung up about customer satisfaction, and I frankly didn’t think that was the right goal. It’s one thing to have a customer call us with a problem. We solve their problem, and they’re satisfied with the fact that we solved the problem. It’s an entirely different matter if, after a customer calls us, they’re much more loyal to us and say, “I’m going to buy from Dell forever because I really get great service and that’s part of the overall experience that is great and I couldn’t imagine buying from anybody else.” There’s a huge difference between those two. And my view was that we had to go toward loyalty and move away from satisfaction.

We couldn’t agree more.

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