Customer satisfaction does not equal loyalty

Your satisfied customers aren’t loyal – not necessarily, anyway.

Customer satisfaction and loyalty are often talked about in tandem these days and for good reason. Consistently unsatisfied customers certainly won’t become brand loyalists or give you their repeat business. But too often, the former is used to gauge the latter – if customer satisfaction is high, so too must be loyalty.

This tendency to blur the line between satisfaction and loyalty is clearly seen in new research from the American Marketing Association. Their analysis identifies two types of loyal customers – satisfied and committed – who are distinguished based on the factors that drive their behaviours.

For customers identified as “satisfied” loyalists, the most significant driver of loyalty was the dependability of the brand – in other words, its trustworthiness and ability to deliver a consistent experience. These customers also had a “light” emotional connection with the organisation in question, saying things like “it makes me happy” or “it’s one of my favourite brands”.

Dependability was also key for those in the “committed” group, along with a belief that the brand was better than others. But notably, a strong emotional connection with the brand was just as important, if not more so, to their sense of loyalty. These customers felt that the brand inspired them, connected with them or that “the absence of the brand would be upsetting” – much stronger feelings than their satisfied counterparts.

Certainly the latter group can be considered truly loyal. But can we really say the same about satisfied customers?
 

Loyalty is an emotion, not a transaction

By far, their most important factor in continuing to purchase from a brand was a consistently good experience. Essentially then, their “loyalty” is transactional – a brand consistently provides the product / service they’re looking for, so in return, they continue to give that company their business.

But what if they have a bad customer service experience? What if another brand offers a similar product or service but at a better price?

Consider the fast-casual Mexican chain Chipotle, which made lots of loyalty headlines with a short-term rewards programme last summer. In late 2015, several of their U.S. restaurants were hit by an E.coli outbreak, and sales suffered as many of their “loyal” customers went elsewhere.

Yet anecdotal evidence suggests there was a segment of burrito-lovers who remained committed and continued to patronise the chain regardless. And remarkably, at least one of those customers had been directly affected by the incident – as part of her settlement with the company, the customer asked for… more burritos. That’s the kind of loyalty brands should strive for.

We can see the two types of loyalty described in the AMA article at play here. Customers who liked Chipotle and counted on them for consistently good food left when that dependability was shaken. But those who had a stronger emotional connection to the brand stuck around.

That’s because customers who are simply satisfied are a bit like “fair-weather fans” in sports. They’re loyal when things are good – when their team is winning – but if things go downhill, or a better team comes along, they can be tempted to switch sides.
 

Emotional loyalty is more valuable

Research published by the Harvard Business Review showed that customers who were “fully connected” to a brand (i.e. emotionally invested) were 52% more valuable than those who were highly satisfied but not connected. Which is why equating customer satisfaction with loyalty can be risky.

Consider Chipotle again – the restaurant chain had avoided a fully-fledged loyalty program for years, relying on its “satisfied loyal” customers to bring in repeat business. But because these customers hadn’t been nurtured into committed (i.e. truly loyal) customers, they jumped ship all too quickly when things went wrong. And Chipotle’s profits and stocks felt the impact.

It’s time for marketers and loyalty managers to stop equating satisfied with loyal. Doing so creates a false snapshot of brand loyalty, which can lead to problems in the long run. Truly loyal customers aren’t just satisfied with your brand, they love it. They’ll tell their friends about it, try other products or services you offer, and be more forgiving if something goes wrong.

That’s not to say that satisfied customers aren’t important. But to reap the rewards of customer retention, businesses need to focus on creating and nurturing committed customers – the kind who will stick around when things get tough.

Learn more about the importance of emotional loyalty and how to nurture it in our ebook. Download it here →