One of the most common problems brands face in 2021, is customer attrition. According to Deloitte, in global markets, the churn rate is as high as 30%. The reasons for a high customer attrition rate could be many, but the most common reason is lack of loyalty.
You may receive a high score on your NPS and CSAT systems, indicating that your customers are satisfied with your product and service but how many of these customers have remained loyal to your brand? There is a big difference between a satisfied customer and a loyal one.
In this article, we answer the pressing question ‘Why satisfied customers are not loyal?’ and share with you some insights on how you can foster loyalty.
Customer satisfaction is the degree to which the product or service is received by the customer. Depending on the expectation a customer may have from the brand, his satisfaction level may vary, which makes it rather subjective. For example, when you buy a product from a flea market, you do not have high expectations from the product. You buy it for a few cents or dollars and if the product does last for a year, you are completely satisfied with your purchase. On the other hand, when you buy a product from a well-known, reputed brand, your expectations are higher. This is why customer satisfaction cannot be used as a parameter for gauging a product’s caliber and neither does it guarantee customer retention.
Loyalty is a stronger emotion, it transcends satisfaction. A loyal customer attaches his emotions to the brand he is loyal to. These customers feel strongly about the brand and resonate with the brand’s ideologies and values. A study by Rare Consulting states that 83% of customers said their brand loyalty stemmed from trust. Trust plays an important role with loyal customers, so long as the brand upholds virtues like transparency and credibility, a loyal customer will stick with it and even forgo a few errors of judgment by the brand; but if the brand breaks the chain of trust, the attrition of loyal customers is unavoidable.
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Happy and satisfied customers are not necessarily loyal. They may, however, be a step closer to becoming loyal. Loyalty is a complex emotion that is not based on one-off instances. Satisfaction is temporary and non-exclusive. Your customers may be satisfied by more than one brand at the same time but it doesn’t mean they are loyal to either of these brands, let alone become repeat purchasers. Loyalty is influenced by many factors. It is a by-product of meaningful engagement, mutually beneficial brand-customer relationship and a bond that is more than just transactional in nature.
The driving factor in loyalty is the emotional connect. Customers attach themselves emotionally with brands that they find either aspirational, trustworthy, reliable, or add value to their lives in some way or the other. This is why brands across the world invest heavily in reaching out to their customers, creating a community for customers, humanizing brand interactions, offering transparency and developing a customer-centric approach. When you starting thinking like your customers and putting their needs before profits, it shows, and this is where true loyalty starts blooming.