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LOYALTY VERSUS SATISFACTION: WHICH ONE IS ‘TOUCHY’?

13 Feb

The Era of Globalization – a very simple term of which everyone is hotly discussing about nowadays. Yes, we are now living in the era where changes occur so fast that it made everyone and everything – not a single factor is left out – is struggling to reach a position on where they can still be called survive or even just to stay exist in this world of competition. This turbulence in the competition is effecting nearly every sector that relates to man’s life in improving and maintaining the high quality standard of life. And that is including economics, which in this case is marketing – as one of the fundamental sectors that experienced the most stringency competition of all. As stated by Kotler (2006), marketing is a process that deals with identifying and meeting human and social needs. What actually are their needs? This is a question in where entrepreneurs, companies, organizations even governments ought to answer in trying to search for opportunities as well as gaining benefits by playing the role of marketing process.

 In marketing, man can be put to different position according to what they are tasked for. They can be consumers or customers, producers, suppliers, or sellers. They can even have several positions at a time too. These positions have their own responsibilities and rights stick to them. In this era of globalization, there seems to be a global agreement in terms of marketing towards a statement that state, “Customer is the King”. Is it right? Of course! If we want to succeed in this era, we need to know their needs, what their expectations, what they want to gain, and not to forget, what they want to win from the products they hope to buy for. So in brief, to stay exist in this era, we need not only a better understanding of our position as producers or sellers, but we also need to view ourselves in the position of the customers themselves in trying to comprehend their expectations, as well as things that drive their satisfaction toward loyalty, which can lead in establishing a customer lifetime value.

To win a customer’s heart or at least we can say his attention to our tangible or intangible products, is still something to do in succeeding to explore his subjective thoughts. We never can predict precisely what things that drive their needs and wants in buying certain products, as the reasons behind each transaction is sometimes may varied from one another. So it is like trying to read ‘a black box’. The globalization era also have sent critical effects to the customers as the end-users. Customers are now becoming harder to please. They are smarter, more price conscious, more demanding, less forgiving, and they are approached by many more competitors with equal or better offers. The challenge, according to Jeffrey Gitomer as stated in Kotler (2006), is not necessarily to produce satisfied customers, where several competitors can do this at the same time. The challenge is to produce delighted and loyal customer.

As stated above, to win the challenge especially in this era of globalization, we cannot just merely consider our customers to be just satisfied. We have to realize that we need to establish them as a loyal customer too. We need to create a customer lifetime value. Why? And how?

A decade ago, satisfaction was becoming a critical indicator in winning customers’ attentions and their willingness to repurchase our products or services. And now customer’s satisfaction is still positioning as one of the key points in extending the process. Why is it now called as ‘one of the key points’ not ‘the only key point’ anymore? Let’s have a look to its definition first. According to Kotler (2006), satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectation. So we can say that a customer satisfaction is only just a feeling of favorable between perceived performance which suits his or her expectation, and also an indicator of future business. Why? Because a highly satisfied customer generally stays loyal longer, buys more as the company introduces new products and upgrades existing products, talks favorably about the company and its products, pays less attention to competing brands, and is less sensitive to price, offers product or service ideas to the company, and costs less to serve than new customers because transactions are routine (Kotler, 2006). But do satisfied or as stated above, highly satisfied customers will give their confidence to only buy our products, not the others? Do they be loyal to us with the help of those feelings of satisfaction? The answer is yes, but not entirely definite. Let’s take a look to the definition of customer loyalty. It is defined as people or customers who will do transactions or business with us again, tell others about us, and refer others to do business with us (Gitomer, 2007). If we try to see the link between customer satisfaction and customer loyalty, then it is sometimes seems to be not proportional. Let see the scale that is used to measure customer satisfaction. According to Kotler (2006), 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 about 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 word of mouth about the company. High satisfaction or delight creates an emotional bond with the brand or company, not just a rational preference. By looking at the scale in measuring customer satisfaction above, it is quite hard for us to predict, let alone measure at an approximate point, to consider whether the customer is suitable in a certain level or maybe more appropriate in the other one. There are no fixed indicators. So, as cited by Gitomer (2007), it is true that one of the main reasons customer satisfactions is a meaningless statistic is that it is not predictable and quite far from measurable, as it relates to business growth.     

By looking from both explanation of customer satisfaction and customer loyalty, then it can be concluded that customer satisfaction is one of the keys that lead to customer loyalty, but it is not perceived as exact indicator to made customers do always loyal to certain products. There are many factors nowadays that serve to contribute in building customer loyalty beside judged by customer satisfaction. They are including the perceived value, the great impressions, relationship with the customers, and the customer satisfaction itself.

The perceived value can be defined as something in the products or services that we offer which is considered as valuable by the customers. It is not the added minor services or hard-to-define extras that those customers have already expected or take for granted, but as cited by Gitomer (2007), it is all about things which can increase the means of sales, the customer productivity, their profits, their morale, and more is to help them in reducing their problems. What we need is a value proposition that fully explains how we can help the customers through our products offering, how they can win, how we can serve them, and how that leads to establish loyal customers and their referrals. In that case, we really need a suitable mission statement that matches the value proposition that we want to deliver to the customers.

According to Gitomer (2007), perceived value is important to a prospective customer for three reasons:

  1. It differentiates us from the competition.
  2. It gives the customer understandable reasons to purchase.
  3. It gives the customer the peace of mind they need to move forward. That is to buy our products.

Beside that, perceived value is also important to an existing customer for three reasons:

1.      It builds real relationship, which is based on value.

2.      It makes reorders more automatic and less bid driven.

3.      It eliminates competition.

So we can see as stated above, that perception of value plays the heaviest role at the end of any sales transaction. Gitomer (2007) stated that, if the customer perceives a difference in what we are offering, and perceives a reassuring value of how he or she can benefits, then the sales is ours. If not, the sales then go to the seller with the lowest price which by means lowest profit.

The great impressions can be defined as a form of good experiences that can easily recalled by the customers if they were asked about certain shopping experiences. According to Barrenbaum and Larkin (2007), there are four success factors in making a great impression to customers. They are:

1.      Respect and accountability. In communicating with the customers, we need to take a respectful collaborative approach. What we need to do is to tell them what we can do, not what we cannot do. In demonstrating accountability, what we need is to tell them what we will do and respond with integrity.

2.      Focus on relationship. If we can communicate in sincere tone and focus on the relationship, it actually shortens the interaction, but yields more results.

3.      Avoid tragic phrases. Do not use phrases which is confrontational (“If you read your manual..”), or sloppy (“Just a second..”), or noncommittal (“That is not my department..”). In this case, we need to use phrases which can show our personal attention, specific, and empathic toward the customers, like (“Thank you, sir. I will e-mail you at noon today..”).

4.      Listen more, talk less. By using our ability to listen, then it can help us to uncover what is the customer really needs, and that can give us the resolution more quickly.

By trying to do some of the points above, they can help us in gaining a good or maybe even great impressions and show them that we really are professional to our customers.

Another factor in building customer loyalty is the relationship with the customers. In our daily activities in doing sales and any other marketing process, relationship with the customers is actually the main thing that we want to construct. This is because the power of the sales and the marketing themselves is located in building the trust, value and relationships to earn referrals, testimonials from our customers, and of course our next business (sale) to them. These are the real values that a relationship with the customers can bring to us. As cited by Gitomer (2007), there are several elements that can give help to build a good relationship towards loyalty:

  1. The value of friendly
  2. The value of enthusiasm
  3. The power of belief
  4. The power of a first impression
  5. The ability to engage
  6. The ability to state what we can do, not what we cannot do
  7. The ability to show how they can profit from our products
  8. Uncover the real customer buying process
  9. Uncover the customer’s motives and reasons for buying
  10. Reduce the risk
  11. View the customers from the other side
  12. Get to know our customers
  13. Building loyal relationship means taking loyal actions
  14. To show how easy it is to do business with us
  15. How we can help customers in building value
  16. The ability to treat all of the customers “as precious as gold”
  17. The ability in creating best practices in building our business.

 And the last but not least is the customer satisfaction itself. So, if we can conclude from what we have seen from several factors above which influence to the building of the customer loyalty, then we can comprehend that customer satisfaction is only a part (we may say a critical one too) in assuming someone or customers to become a loyal ones. We also can consider that a customer’s decision to be loyal or to defect is the sum of many small encounters with us as the company that offer.

It is also said that the more loyal the customers, the higher the customer equity. As stated in Kotler (2006), customer equity is the total of the discounted lifetime value of all of the firm’s customers. As stated by Rust, Zeithaml, and Lemon in Kotler (2006), there are three distinguish drivers of customer equity: value equity, brand equity, and relationship equity.   

·         Value equity is the customer’s objective assessment of the utility of an offering based on perceptions of its benefits relative to its costs. The sub-drivers of value equity are quality, price, and convenience.

·         Brand equity is the customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value.

·         Relationship equity is the customers tendency to stick with the brand, above and beyond objective and subjective assessments of its worth.

In reality, to get a loyal customer, we have to be a loyal employer or employee first too. This is logical, the same as if we wanted someone to smile to us, and then we have to smile first too. As stated in Gitomer (2007), loyalty starts with a corporate philosophy. The one which is created by the owner or the CEO, not the marketing department or even advertising agency. The CEO has a vision of self-service, in which also serve as the mission that has to be carried out. We can take Hugh McColl’s vision, the founder of the North Carolina Bank, for example. As cited in Gitomer (2007), his philosophy was very simple: “I take care of my people, my people take care of my customers, and my customers take care of my shareholders”. So, what can we summarize from it is that, if we want to succeed in bringing loyal customers, we have to start building it first in our own company. The CEO and the management number one job are to take care of the employees. Happy and empowered people (in this case are the employees) can transfer those feelings of spirit and happiness to the customers. And vice versa. If one may say, a sincere smile is the biggest power in attracting customers to become loyal ones. We also have to take loyal actions and start with our own good attitude. Loyalty is something that we cannot teach, but it is something that we offer to instill positive attitudes among all the personals in the company as well as the environment.

 

So, what we can conclude from this topic of Loyalty versus Satisfaction, is that we cannot just merely lean ourselves to only have customer satisfaction in succeeding our struggle in surviving the competition especially in this era of globalization. What we need to ensure is that about our ability in attracting them to become our loyal customers. It is hard for us to measure customer satisfaction as there are so many ambiguous things around. But we can measure customer loyalty, that are by counting the number of repeat customers, referred customers, as well as counting sales and their profits.

Copyright : evy_02@yahoo.com

 

 
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Ditulis oleh pada Februari 13, 2008 in Tahukah kamu..?

 

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