Lead Story

Win customer love, not just satisfaction

Brands must work to gauge what their customers truly value and give them add-ons that delight them 


During various interactions with CEOs of a wide array of companies in connection with strategy execution, I quite often come across an issue which might be familiar to many of you: The customer satisfaction surveys in India often show most customers rating the company or its offerings at four (on a scale of one to five, with five being excellent) and yet the sales go south.

The answer to this paradox lies in understanding the difference between customer satisfaction and customer loyalty. Customers may be extremely satisfied with a product or service, but that doesn't necessarily mean the brand has won their loyalty. If your customers say they are extremely satisfied, and at the same time they shop at your competitors’, you have failed to create loyalty. Customers leave, even if they are extremely satisfied, for various reasons.

A recent study showed that five per cent of disloyal customers left giving no reason, seven per cent developed a relationship with a competitor, 11% left for competitive reasons (often price), 17% left because they were dissatisfied with the product and an overwhelming 69% left because they felt an attitude of indifference from the company or retail outlet. More than two-thirds didn't feel loved. Don't marketers owe customers more than that? The answer is an obvious "Of course we do," particularly when we all desire loyal customers.

Traditional customer satisfaction surveys used to assume that a score of four was good enough. Often efforts to improve customer satisfaction were focussed on the ones and twos, learning how to convert them into threes and fours. Early customer satisfaction researchers thought that if marketers could get the dissatisfied people to become satisfied customers, sales would increase. Today, it is widely understood that in order to increase customer satisfaction, and consequently, loyalty and thus sales and profitability, you must focus marketing efforts on what it will take to make the good customers feel loved. In other words, convert the threes and fours into fives.

Experts define customer needs in three hierarchical levels: basic needs, performance needs and delighters.

Basic needs are those features that customers have come to take for granted. For example, a car buyer at the time of buying a new car expects that it will have four tyres and a spare tyre. If these are there, attributes that satisfy basic needs are present, but do nothing to make a customer feel loved. On the other hand, if the spare tyre is not present, as some carmakers are doing today, that can cause tremendous customer anguish. Unless it is a BMW where the tyre technology replaces the need for a spare.

Performance needs are those items from which consumers derive marginal utility –things for which a customer is willing to pay extra. Power door locks, keyless entry and power windows are examples of features that satisfy performance needs in a car.

Delighters are those things that customers didn't expect but that provide a great deal of customer satisfaction because they satisfy a need he truly values. Delighters might be GPS, high-fidelity speakers or just panoramic windshield. Or, for a hotel guest, personalised attention, dark chocolates and freshly baked cake with their name on it. Delighters cost more. However, studies have shown that it can cost eight times more to attract a new customer than to sell a current customer more.

My recommendation is to identify what your customers truly value and then develop clever methods to satisfy those values. Many times you can charge extra for services that customers value, which will more than offset the additional cost.

This takes some effort. The challenge is in determining what customers truly value, because they typically are not going to tell you, or they don’t even know. Returning to the car example, let's say a 38-year-old woman buying a popular 2021 SUV, and tells you that the features she likes are the high ground clearance, the vehicle size, four-wheel drive and the longer wheelbase. The benefits (she tells you) she derives from these features are good visibility, extra storage space, all-weather capability and off-road capability. However, few customers really take their SUV off-road or drive in extreme inclement weather. They are more likely to keep the car garaged and neatly polished than take it on muddy roads. This 38-year-old car buyer didn't tell you what she truly values: That the big SUV makes her feel safer from other rash drivers on the road and independent, gives her a presence among male drivers in the urban roads.

The delighters in this example, then, would be features that provide the customer with added feelings of dominance and independence. Once you have determined what your customers truly value, then develop as many benefits as possible to satisfy those values.

There exists a tremendous difference between the loyalty of merely satisfied and totally satisfied customers. A small drop in total satisfaction will result in a major drop in customer loyalty and vice versa. To increase customer loyalty, you must understand customers' true values that are often hidden behind what they initially tell you. Customer loyalty research must focus not on what customers say, but what they don’t. This pandemic season is the best time to build on the new loyalty.

M Muneer is managing director of CustomerLab solutions and co-founder of the non-profit Medici Institute. Twitter @Muneermuh