Most businesses (if not all) would like their customer to be satisfied with their product or service. More than often, they would come up with ways to make sure their customer’s satisfaction is at its optimum. It’s the reason why some run start off with loyalty programs or give out special gifts to their customers.
But let’s look at this, and based on research findings, see if providing and assuring customer satisfaction actually brings in business or is it not as good an investment as most businesses think it is.
In an article entitled ‘Customer Satisfaction and Loyalty’ by Paul G. Linnel, he hypothesis that as satisfaction levels drop, loyalty drops faster. Of course, having an accurate account of a customer’s satisfaction is difficult to quantify, and it will be a lot trickier to add customer loyalty into the equation.
Nonetheless, let’s just try.
Looking into customer satisfaction, a Malaysian institute of education conducted a research on Benefits—Satisfaction—Loyalty Linkages in Retail Loyalty Card Programme Model: Exploring the Roles of Programme Trust and Programme Commitment. In the paper, the authors state that satisfaction is a programme member’s affective state as a result of cumulative evaluation of experience with the loyalty card programme. This is the conclusion based on a through literature review that loyalty programmes have become a vital component of customer relationship management (CRM) as it served a critical role in developing relationships, stimulating product and service usage and retaining customers. In a nutshell, this research states that loyalty programs improve customer satisfaction.
In case study of The Relationship between Loyalty Program, Customer Satisfaction and Customer Loyalty in Retail Industry, it states that loyalty programmes differ from normal promotions because there is a long-term commitment in shaping a customer’s behaviour. It goes on to state that a loyalty member’s satisfaction with the loyalty programme has a positive effect on the programme loyalty. In simple terms, once a customer is happy with the loyalty card benefits, they will feel positively about it and respond better to it.
Since the advent of loyalty programs, businesses have gotten really creative about getting customers to spend. Sunny Bose wrote inPerceived Benefits of Customer Loyalty Programs: Validating the Scale in the Indian Context that shopping partners program significantly influence customer satisfaction. He also added other possible criteria’s that include satisfactory resolution of hiccup and relational encounters. In fact, successful resolution of any problems will positively affect the way your business is perceived and will most likely be extended through word of mouth. He also continued to introduce five types of perceived benefits (introduced by Mimouni-Chaabane and Volle, 2010) which are monetary savings, exploration, entertainment, recognition and social benefits derived from loyalty programs.
Stemming from the above paragraph, in a paper entitled Loyalty Programs Significantly Influence Customer Satisfaction, it finds that customer loyalty programs can be divided into two; soft and hard benefits. It may well fit into any five of the perceived benefits above. The hard benefits encompass rebates, discounts and coupons whereas soft benefits do not involve money such as free gifts and special treatment.
Some might argue that customer loyalty and satisfaction does not always influence each other towards improving a business. I guess it’s because we have perceptions to different things. There is no one size fits all solution.
There can be satisfaction without loyalty. For example, a place that sells my favourite thing may keep me satisfied; but I may not always want to shop here. I may always be on a lookout for other avenues that I can get the item that I want for probably cheaper or other designs that I like.
Also loyalty may also not equal satisfaction. Let’s pretend that there is this cosy café down the street that scores full point for the atmosphere. It is one of my favourite places to be in. However, I might not be satisfied with some other things in this store. It may be the costly coffee or a rude waiter.
From this we can see that yes, there might be a link between customer satisfaction and loyalty, but it does not always work that way. Therefore, please get rid of that assumption. First, be in a position to attract customers to be loyal. This usually works with loyalty programmes. However, it should not stop there. Customer satisfaction must not be compromised.
Are you toying on the idea of having a loyalty programme? We would encourage you to do it. But beware though, that it does not hinder the satisfaction of your customers towards your business or the quality of your product/service.