What’s the Difference Between Customer Satisfaction and Customer Loyalty?

Customer satisfaction is a measurement of a customer’s attitude toward a product, a service, or a brand. It’s usually measured by a customer satisfaction survey on a numerical scale. Customer loyalty is a set of behaviors and attitudes that a customer exhibits that demonstrate loyalty to a product, service, or brand, such as repeat purchases or choosing the brand over a competitor.

When you make a sale, it’s easy to assume you’ve just served another satisfied customer. Unfortunately, this isn’t always the case. The customer experience comes in all shapes and sizes, and the more you know about your business’s experience, the easier it is to make it better.

For brick-and-mortar stores, face-to-face interaction can give you some idea of how a customer experience is going. It’s safe to assume a customer who is yelling at a sales rep, for example, isn’t having a great experience. It’s safe to assume someone who comes in frequently with friends and family, on the other hand, is a loyal customer.

Customer Loyalty vs. Customer Satisfaction: What’s the Difference?

Imagine you just went to the store and bought a brand new 4K TV you’d been eyeing. Someone hands you a survey after you’ve made the purchase, asking you whether or not you’re satisfied with your experience. Of course you are — you got the TV you wanted at the price you were willing to pay, and you’re chomping at the bit to set it up at home.

Now imagine you were instead handed a different survey at the end of the transaction — this one asking you how willing you are to recommend the store to friends. Well, you got your TV. But the sales manager wasted time trying to sell you on a bigger one. You probably could’ve bought the thing just as easily on Amazon, but you wanted to get it that day so you could set it up for your Olympics watching party tonight. Unless they’re in a big hurry, you probably wouldn’t recommend a friend comes here for their TV.

One of these surveys measures the past (customer satisfaction), and the other measures the future (customer loyalty). As you see in this example, they can produce very different feedback, each of which has its own implications for your business’s success.

How to Measure Customer Satisfaction

Customer satisfaction is the sentiment of the customer after completing a transaction with your business. You can use it to understand whether or not the customer experience met expectations. It’s also a great way to let upset customers vent, giving them a private channel to express their feedback, rather than expressing an angry opinion publicly on social media or in a review.

The most straightforward customer experience metric, customer satisfaction score (CSAT) can help you understand if your store is performing its most fundamental tasks. A high CSAT tells you that your shopper’s journey to buy something in your store is smooth, predictable, and doable. A low CSAT may indicate you’re losing customers before they’re ready to check out.

You’ve probably seen CSAT surveys in the past. They simply ask you to rate on a point scale (1-5 or 1-10, for example) how satisfied you were with your experience.

For web stores and touchless sales processes, when you survey for customer satisfaction is important. Common times to show a survey are on the “checkout successful” page after a purchase, in a follow-up email later on, or a few months before the end of a subscription. CSAT surveys are also used widely throughout the customer support experience, from online help troubleshooting to customer support rep calls, to measure how helpful the interaction was for the customer.

How to Measure Customer Loyalty

Although CSAT is an important metric, measuring customer loyalty may be even more crucial for your business. Loyal customers write positive public reviews, spread the word to friends and family, and come back to your store to buy and spend more — all of which generate new and repeat business for your store.

Unlike customer satisfaction, customer loyalty is forward-thinking. It’s a measure of how much value you may get out of your customers over the long term.

To measure customer loyalty, you can use Net Promoter Score® (NPS). You measure NPS in a similar way to CSAT, using a survey on a ten-point scale that asks the question, “How likely are you to recommend [store/product] to a friend?” For each survey response, you can put your customer into one of the following buckets.

  • Promoter (Score: 9-10): Your best customers are advocates for your store, returning often to buy again and referring their friends and family, in turn generating more sales for your store.
  • Passive (Score: 7-8): These customers may score well on CSAT surveys, but they don’t have much loyalty to your store beyond that. If they find a better deal somewhere else, they’ll likely take it.
  • Detractor (Score: 0-6): The widest survey score range, unfortunately, is reserved for customers who may actively look to damage your brand through negative reviews.

To find your NPS, subtract the Detractor percentage from the Promoter percentage. The NPS ranges from -100 to 100. Where your store lands on the scale is a good indicator of whether or not it’s doing the hard work of creating loyal customers.

How to Improve Customer Loyalty

No store can score 100, which means there are always opportunities to improve your customer loyalty. Here are four areas to focus on as you work to improve your customer loyalty.

1. Exceed expectations

You can — and should — ensure everything about your customer’s shopping experience is optimized, easy, and fast. But living in today’s age of efficient online and touchless purchases, you can do all of that and still only meet your customer’s expectations. Just meeting expectations ensures customer satisfaction, but it doesn’t go very far in building customer loyalty.

Exceeding expectations takes a little work, but it’s worth it. You can exceed expectations by delighting your customer. A few ideas:

    • Train customer service reps to go above and beyond for customers
    • Add surprise discounts before your customer checks out or by email after the original purchase
    • Send a free gift with a customer’s order
    • Check in after the customer receives their order to find out if they have any questions or complaints
    • Provide new customer or user onboarding
    • Offer free shipping

2. Communicate well

Good communication is human. If you communicate well, it can add a human element to your brand that inspires a deeper, more emotional connection between the customer and your business Times to focus on strong communication include:

    • Updates during the shipping process
    • Check-in after the order is received
    • Strong follow-ups to any customer support emails
    • Timely explanations for any order delays or issues
    • Touching base around the time of renewal

3. Reward loyal customers

Conditioning good behavior should be a core part of your customer loyalty program. If your customer buys from you frequently or generates new customers for your business, shouldn’t they get something out of it?

Of course they should, which is why it’s important to create strong rewards programs for return customers and customer loyalty programs for customers who spread the word with friends and family.

4. Use metrics to improve your business

CSAT and NPS aren’t the only metrics you should use to improve your business. Keeping a close eye on the health of your business means understanding the customer journey and measuring your after-sale impact.

Measuring if your email marketing campaigns are generating more sales, for example, is a good way to see where you can improve customer loyalty.

Remember, a satisfied customer isn’t always a loyal customer. Benchmarking your customer experience is a critical part of keeping a business scaling and moving forward. If you aren’t measuring them already, consider creating surveys to measure CSAT and NPS for your business.

Written by Jimmy Rodriguez

Source: Hubspot

Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

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