How Customer Satisfaction Translates to Brand Loyalty

In the past, businesses focused only on attaining their financial goals by being product or brand-oriented. When the customer-oriented trend started in the 70s, the focus shifted to how businesses can satisfy the needs of their customer, resulting in a longer business relationship.

Customer Service

Being proactive means that even before a problem arises, you must think of steps to prevent these hindrances to your business. Stop being reactive and learn to anticipate different scenarios, especially when it comes to customer service. By being proactive, customers will not need to waste their time to complain about you, your services or your product. The Customer Service Area will cease to be the place where people just lodge their complaints, it would become a tool for you and your customers to communicate and understand each other....




Microsoft Dynamic shared a list of facts to help you remember why you should work on being proactive rather than being reactive in terms of customer service:

§ Just a 10% improvement in an enterprise company’s customer experience score can translate to more than $1 billion in increased revenue. - Forrester Research

§ A 5% increase in customer retention can increase profits by 25% to 95%. - Bain & Company

§ Customer expectations for proactive service are continuing to grow. According to a recent Customers 2020 Report, “the customer of 2020 will be more informed and in charge of the experience they receive. They will expect companies to know their individual needs and personalize the experience. Immediate resolution will not be fast enough as customers will expect companies to proactively address their current and future needs.”

§ Consumers 18 to 29 years old are more likely to use a brand’s social media site for customer service interactions (43%) than for marketing (23%). - J.D. Power and Associates Social Media Benchmark Study



Customer Satisfaction

Customer Satisfaction directly affects the business, one way or another. According to a study by Dr. Zeynep Bilgin, high satisfaction or dissatisfaction rates can result into several courses of action for customers.

High Satisfaction (Retention and Loyalty)


Dr. Bilgin’s study discussed the difference in cost between acquiring new customers and retaining old ones. Acquiring new customers can be quite costly since advertising for new customers can be more expensive than say, posting on your company’s Facebook page to inform your old customers that there would be a sale in your store. Customer retention, however, should not be mistaken as customer loyalty. A customer might continuously purchase your product but he/she may not be satisfied with the performance of the product. Loyal customers are described by Dr. Bilgin as “less price-sensitive and more inclined to increase the number and/or frequency of purchases.” Additionally, repurchase alone is not an indicator of loyalty. As more businesses started to realize the importance of customer loyalty, more loyalty reward programs emerged aiming to promote customer loyalty.



Dissatisfaction (Brand/ Store Switching, Complaint Behavior, Negative Word-of-Mouth)

In expressing their dissatisfaction, customers can go from passive to active. Actively expressing their discontent can also vary from public to private. Public action can include “seeking redress directly from the organization, taking legal action, or complaining to public or private agencies” while private actions include “boycotting the seller or manufacturer (brand switching) and/or engaging in negative word-of-mouth.” The customer, whatever method he/she chooses, will affect the business. Negative feedback on products and services would certainly impact the revenue and image of the business.


Businesses, no matter how big or small, should always keep in mind that proactive customer service can help their business go the extra mile. Customer service is not about attending to the complaints of your customers but catering to their every need before they even realize what it is.


Sources:

§ Academia.edu: http://www.academia.edu/1977823/CUSTOMER_SATISFACTION_A_CENTRAL_PHENOMENON_IN_MARKETING

§ Microsoft Dynamics: https://community.dynamics.com/crm/b/crmconnection/archive/2014/09/08/to-amplify-customer-satisfaction-amp-brand-loyalty-give-customer-service-a-bigger-voice.aspx