Relationship Between Customer Satisfaction and Loyalty

Customer loyalty is an emotional rather than a rational thing. It is typically based on customer interest in maintaining a relationship with one organization. Often, customer interest is created and maintained through one or more positive experiences which lead to a relationship. Relationship is built on trust the most important thing to remember about trust is that without it, one have no relationship. This applies to all human situations, not just the customer service environment, for customers to continue long business with one and ones organization, trust has to be earned, and it does not happen overnight. Only through continued positive efforts on the part of everyone in organization can anyone demonstrate to customers that one can be worthy of their trust and thereby positively affect customer retention. Through actions and deeds, one must deliver quality products, services, and information that satisfy the needs of one’s customers. Even when one wins trust, it is very fragile. And inappropriate one, a missed appointment, failure to follow through on a promise, a lie, of misleading statements to a customer are just some of the ways one can destroy trust quickly.

In general, satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing product’s perceived performance (or outcome) in relation to his or her expectations. If the performance falls short of expectations, the customer is dissatisfied, if the performance matches the expectations, the customer is satisfied, if the performance exceeds expectations, and the customer is highly satisfied or delighted.

Relationship between Customer Satisfaction and Loyalty

The link between customer satisfaction and loyalty is not proportional suppose customer satisfaction is rated on a scale from one to five, at a very low level of customer satisfaction (level one), customers are likely to abandon the company and even bad mouth it. At levels two to four, customers are fairly satisfied but still find it easy to switch when a better offer comes along, at level five, the customer is very likely to repurchase and even spread good work of mouth about the company. High satisfaction or delight creates an emotional bond with the brand of company, not just a rational preference. For example, Xerox’s senor management found out that its completely satisfied customers are six times more likely to repurchase Xerox products over the following 18 months than its very satisfied customers.   Up to Level four there is a chance of customer to leave the brand but from level five customer satisfactions is proportional to the customer loyalty

The disloyalty at current rates would stunt the corporate performance by 25 to 50 percent, and sometimes even more, by contrast, the business enterprises that concentrate on finding and retaining good customers, productive employees and supportive investors still continue to generate superior results the loyalty factor remains one of the day elements in the success of a business enterprise. In fact, the principles of loyalty and business strategy.

In simple terms, loyalty is best defined as a state of mind, a set of attitude, beliefs, and desires. Most of the companies benefit from the customer’s loyal behavior, which is an end-result of the positive state of mind shown by the business enterprises in serving their customers. To make customer loyal to the product company should focus on some significant things. Consumers can be divided into steps of a ladder. More marketing effort should be given for the people on the top step of the ladder. These kinds of peoples are who are more likely to spend huge money for the product.

Several reasons could be pointed out to show why the loyal customers repurchase a high proportion of their needs from the same source are much more profitable.

  • Lower costs of service:  The loyal customers are easier and cheaper to service. Since they are familiar with the products and services, because they would not have as many questions are less likely to make mistakes, and would have adjusted their behavior to simplify their relations with the supplier.
  • Increased purchases:  The loyal customer tend to buy more as the time progresses, either because they learn about part of the product line of they give a higher proportion of their spending to the favored source.
  • Less price Sensitivity:  They tend to become fewer prices sensitive and may pay a premium. Al the relationship strengthens over time, they are less susceptible to the competitors appeal, and since they are satisfied by what they are receiving from the enterprise, they are prepared to pay more.
  • Favorable word of mouth:  Finally, the loyal buyers are more likely to pass on favorable recommendations to others who also tend to be higher quality prospects. This helps in reducing the high costs of new customer acquisition.
  • Sustainable Advantages:  Another reason for the rising interest in the market relationship is the durability factor involved in a committed relationship. In fact the proper chemistry of positive relationship is hard to understand copy or displace, this is a persuasive argument, in cases where the product-based advantages are short-lived and new competitors are posing challenges on all sides. Furthermore, with network technologies that could enable the addressability, interactivity and demand chain coordination, business firms are currently better equipped with both the motive and means for moving closer to their customers.

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