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WHILE it is important to survey customers to find out whether they are satisfied or not, it is often more insightful to assess whether they are loyal to your company or not. Loyal customers are repeat purchasers of your product who often perceive a great value in your company's after-market services.
Though satisfaction and loyalty are certainly related, it is clear that satisfied customers are not necessarily loyal ones.
A threshold level of satisfaction exists at which customers may be designated as loyal. When the value of your company's products and services is so great that the real and perceived transaction costs in switching to the competition are higher than repeating a purchase from your company, a loyal customer is created. Pinpointing both the threshold levels of satisfaction and key drivers of loyalty may be achieved through regression analysis. Segments of customers may then be indexed by how loyal they are to your company and tracked over time. This information allows your company to focus resources on services that foster loyalty. An understanding of what customers find important and fulfillment of their salient needs lead to attraction of new loyal customers, retention of current loyal customers, and ultimately higher profits.
Loyalty projects usually start with a baseline survey and are followed up with tracking studies. A loyalty index is formulated with a system of lead and lag indicators that enables you to understand who your loyal customers are, what they value most, and how their needs change over time. An investment can then be made in creating loyal customers, not just satisfied ones.
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