With the evolution of online sales and services offered by modern companies, knowing about customer experience has become increasingly difficult. The experience you give to your customer shapes their perception towards your brand. A satisfied customer may not be a loyal one. Hence, you need to understand the key elements of customer satisfaction vs customer loyalty to make it work in your favour.
The distribution model of SaaS companies has totally changed the way companies obtain customer’s feedback. Comparatively, it was much easier in physical stores to know how satisfied or dissatisfied a customer is. Just the way they converse with your sales reps tells everything about their perception.
But when it comes to online customers, you cannot rely on non-verbal communication. Furthermore, the feedback that customers leave on online platforms travels much faster across the web than the traditional path.
So when it has become unclear about what your customer thinks, how would you improve upon their satisfaction levels and fetch customer loyalty? To know this, let us first understand the difference between the two.
Customer satisfaction vs Customer loyalty
Customer satisfaction measures how your customer feels about your product or brand. It is calculated based on some qualitative questions sent in a survey and finally understood in terms of a score. That is called a CSAT score.
Whereas customer loyalty is the attitude a customer demonstrates by showing loyalty towards your brand. Naturally, this goes much beyond mere customer satisfaction. While having high customer satisfaction is good, customer loyalty is an even greater attribute to have for any company.
A loyal customer spreads a good word about your brand and would not leave you for any other competitor. Hence, through this concept, we can say that every loyal customer is a satisfied customer but not every satisfied customer is a loyal one.
Measuring Customer Satisfaction
CSAT score is measured usually after the completion of a particular transaction with your customer. It is a clear indicator of how your customer feels after doing the transaction with your brand. Hence, it is more of an incidental measure rather than a permanent score.
For example, after the completion of a support call, you can ask your customer about their satisfaction level from the call. This is usually measured on a score between 1 to 5 or 1 to 10.
This usually gives them a good channel to vent out any frustration, if any, they had during the touchpoint. It is quite effective in preventing them from sharing the bad experience on social platforms. An average American tells 15 people in their circle about their bad experience with a brand. Hence, the sooner you collect the CSAT score after a transaction, the better you are able to handle the customer and your brand image.
Measuring Customer loyalty
When it comes to measuring customer loyalty, it is usually done through the Net Promoter Score (NPS). It is just a one-question survey you send to your customer asking about “how likely are you to recommend our product to others”? Their response is measured on a scale from 1 to 10. The following are the meanings you can derive out of their responses.
- Promoters (9 – 10): Those who give a score of 9 to 10 are called promoters. They are the biggest asset among your customer base. They would not only buy repeatedly from you but would also spread a good word about your brand in their social circle.
- Passive (7 – 8): These are the customers who think neither good nor bad about your brand. They are satisfied with your service but are not committed to it. Their loyalty remains only as long as they don’t find a better deal than yours. Nevertheless, they are harmless to your business.
- Detractors (0 – 6): Customers who give a score ranging between 0 to 6 are most prone to harm your business. They are not only dissatisfied with your brand, but would also not hesitate to spread negative feedback in their peer group.
From satisfied customers to loyal customers
If you have understood above the comparison of satisfaction vs loyalty, you would have also understood that loyal customers are few steps ahead of a satisfied customer. You may have a lot of satisfied customers but you need much more to leverage that towards turning them into loyal customers. Below are a few steps you can take towards the same.
All your attempts towards customer loyalty start with the first phase – onboarding. You should have a well-structured and well-planned customer onboarding program from the very initial phase. During this phase only you should be able to win their hearts and demonstrate a perception of high customer value.
So, how do you do it? Create your onboarding structure as seamless as possible. The customer should be able to navigate the onboarding with the least amount of guidance. And if your product is complex then make sure you have enough resources to configure your product in their technical environment.
In a fast-paced business environment like SaaS, where switching cost is incredibly low, customers don’t usually have the time to raise their concerns. If they face any difficulty, they simply switch to another vendor. Hence, you need to be vigilant of their usage pattern from the very beginning itself.
If they are not using all the product features, for example, you must have clear information on the same beforehand. Based on this information, you can engage with them for tips and recommendations proactively to improve their product experience.
This is an important concept for understanding satisfied customers vs loyal customers and how to leverage it. When your customer has adopted your primary product, that means they are fairly satisfied, you must approach them for upselling and cross-selling other relevant products too. Through this, you are not only generating more revenues but also increasing your footprint in the customer’s territory.
The more engaged they are with your brand through different products, the more likely they would become loyal. Furthermore, when they buy your higher-end products, they get more accustomed to your brand which prevents them from switching to another vendor.
Customers are usually not as expressive as you want them to be. In fact, to be more precise, only 1 out of every 26 unhappy customers complain. The rest of them simply churn. This shows that even silent customers have a voice. We simply have to learn to identify them and take corrective measures towards improving their satisfaction.
Another reason for not settling down just with the satisfied customers is that in most cases, they simply say they are satisfied rather than going into the details of what you can improve. You cannot simply rely on customer surveys to know their loyalty index or satisfaction levels. You also need to gauge it through regular customer touchpoints you make during the course of serving them.20
Customer loyalty is a mindset you need to implement across all channels of customer interactions. With due persistence and consistent efforts, it can be fetched and leveraged for your business to reach new heights.
Rakhin has over 10 years of experience driving business development and client services. In his prior roles, he stayed close to customers to understand their requirements and help them achieve their business goals. He is passionate about customer success.
Published October 08, 2020, Updated March 02, 2023