Everybody talks about it, but we hardly have any good examples of the relationship between customer satisfaction, loyalty and repurchase behavior – especially examples that businesses like to share. I just found one of these examples that give an idea about the relationship between customer satisfaction and loyalty. Maybe it is helpful to you the next time you need a practical example.

[…] for several years, Xerox has polled 480,000 customers per year regarding product and service satisfaction using a five-point scale from 5 (high) to 1 (low). Until two years ago, Xerox’s goal was to achieve 100% 4s (satisfied) and 5s (very satisfied) by the end of 1993. But in 1991, an analysis of customers who gave Xerox 4s and 5s on satisfaction found that the relationship between the scores and actual loyalty differed greatly depending on whether the customers were very satisfied or satisfied. Customers giving Xerox 5s were six times more likely to repurchase Xerox equipment than those giving 4s.

This analysis led Xerox to extend its efforts to create apostles – a term coined by Scott D. Cook, CEO of software producer and distributor Intuit, describing customers so satisfied that they convert the uninitiated to a product or service.

Found in Putting the service-profit chain to work by JL Heskett, LA Schlesinger, Harvard Business Review, 1994,

Alternative download link: http://www.favaneves.org/arquivos/artigoextra6-5.pdf

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The question whether our economy is in a recession is a difficult one that not even our smartest economists are able to answer. It is not important whether the worst is already over or is yet to come, businesses are facing challenges to win and retain customers today.

Companies that have systematically built relationships with their customers in the previous years should now tap into the potential that lies within the most potential customers. As AdAge reports, marketers are shifting to programs to keep their core audience, their most loyal and profitable customers.

It is a well known fact, that most of a business’ revenues come only from a small portion of its customers. When times get tougher it is more economically reasonable, to invest to keep these customers loyal. Adam Burke, senior VP Customer Loyalty of Hilton Hotels notes:

Our Honors members tend to be the group that buoys us through a downturn. They are the core audience and tend to stay loyal and sustain the business especially through those downturns.

But the challenge remains that betting on your customer’s loyalty cards is not enough. Differentiated and customized services that match your customers needs are the key to keep them loyal. Focusing on their individual experience will help your business make it through these stormy times.

"It’s important […] to understand that loyalty is not a plastic card. It’s about creating experiences and recognition with programs versus just making it a plastic card inside a wallet. That’s what is next for loyalty."

Read the full article here.

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