Customer Loyalty and Why it Matters

customer loyalty

Organizations can’t exist without their customers, clients or followers, and the opinions of those important groups can significantly shape the success of any company. Perception and reputation is everything and for small businesses, it can make or break them. It is important for any company, regardless of industry, to know their customers intimately and be actively striving to increase customer loyalty. With that in mind, there’s one question every business should be asking their clientele post-sale:

“How likely are you to recommend our company/product/service to a friend?”

This question is aimed to measure the loyalty that exists between provider and consumer in post service/purchase surveys. The answers given are gauged on scale from 1-10 and are then broken into three different groups to categorize the customer mindset: detractors (1-6), passives (7-8) and promoters (9-10).

Promoters

Those who responded with a score of 9 to 10 are called Promoters. Promoters are cheerleaders, the brand’s biggest fans and they are considered likely to buy more, remain customers longer and make positive referrals to other potential customers. They don’t like just like the brand, they LOVE the brand. They forgive when mistakes are made and they talk up the brand to their friends. Promoters even promote other promoters.

Detractors

Anyone who gives a score of 1 to 6 is called a Detractor. Detractors are the “haters”: those customers that for whatever reason (within or out of your control) had a bad experience. A customer is 40% more likely to share negative feedback than positive feedback, which is why detractors can be so harmful. 50% of detractors will no longer be customers within 90 days or will choose not to repeat business even once.

Passives

Passives are those who responded in the middle with a 7 or an 8. They aren’t disappointed but aren’t going to go out of their way to endorse the brand either. Further, passives have neutral feelings or experiences with a brand; they’re just unenthusiastic and may switch to a competitor who offers something new or more interesting.

Why does it matter?

Thinking about your business, it might be easy to pinpoint specific customer experiences or interactions that fall into any category. Once promoters are identified, it’s just as important to identify what it is that has made them respond favorably. It will take two promoters to counter one detractor, so it is critical to identify a detractor and improve their experience to prevent a domino effect of bad referrals. With swift action, detractors can be neutralized or even converted to promoters depending on the level or response to rectify the dissatisfaction. It’s important to evaluate the measures you’re taking to address the concerns of detractors and do what’s in your power to ease their concerns and change their perspective. A passive customer, much like their loyalty, could go either way and become a potential promoter or detractor based on continued interaction.

In all industries, competitors are always waiting for one wrong move from their counterparts to cash in and gain market share. Customers are fiercely loyal to organizations who show empathy for them, take responsibility for their work, and act generously. High loyalty equals faster growth, proving that loyal customers drive your bottom line.

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Written by Molly Dysart

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