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Customer loyalty and satisfaction

Customer loyalty and satisfaction is an important factor for every company. The satisfied and delighted customers keep purchasing the products from the same brands. These types of satisfied customers provide a positive and encouraging word of mouth to others. In contrast, who are not satisfied with the brands can spread negative word of mouth. Some of them remain neutral and switch to competitors products.

There are five types of customers. This is classified based on their satisfaction levels and behavioral aspects.

  1. The Loyalists

They are completely satisfied customers. However, they are keeping their purchasing at the same level all year round. As a result, they are helpful for providing positive word of mouth.

  1. The Defectors

They feel neutral or merely satisfied with the company’s offerings. Besides,  they are likely to switch to another company that offers them a lower price. However, the company needs to raise defectors satisfaction to make them loyalists.

  1. The terrorists

They have had negative experiences with the company. Besides, they provide a negative word of mouth. Moreover, they are really harmful to the company. As a result, companies must take corrective actions to get rid of terrorists.

  1. The hostages

They are unhappy customers. However, they only stay with the company because of the monopolistic environment. Moreover, they are difficult and costly to deal with their demands. So, companies should fire them or more possibly ignore them.

  1. The Mercenaries

They are very satisfied customers. But they have no actual loyalty regarding brands. Besides, they may switch to others because of the lower price or better offerings. As a result, Companies need to study them to satisfy them.

Customer loyalty and profitability

All customers are not equal.  That’s why; marketers build selective relationships with customers based on the customer’s profitability.

Measures of customer retention

Customer retention is the keeping customer into a long run relationship. For this, companies need to satisfy the customer by providing better product performance. Otherwise, consumers may switch to competitors products. Besides, it is more expensive to attract a new customer. That’s why marketers try keeping their existing customer by satisfying them.

After ensuring customer loyalty and satisfaction, companies need to measure customer retention. It can be done in three ways. Have a look –

  1. Customer valuation

Divide the customer according to their financial ability to buy goods. Because the company should decide whether they should invest more to maintain a good relationship or not. Besides they should determine which relations be served differently or even terminated.

  1. Retention rates

The percentage of customers keeping in the whole year is a retention rate. It means that the same customers at the beginning of the year are still buying products at the end of the year. Companies can analyze this ratio for a better understanding of the products and market segments over time.

  1. Analyzing defections

The marketers try to find out the root causes for defections of goods. They are no longer waiting only for the symptoms. However, they accept customers to complain and compare with the competitor’s defection rate.

From the result of measurements, companies should develop and implement corrective plans. Retention strategies are involved with several elements of the company. Like, improve employee performance, greater top management endorsement regarding value, recovery systems, recognition systems and adjustments to the company’s reward. Moreover, companies should erect barriers to customer switching. As a result, companies are providing a bundle offering to customers at a single price. Thus, they adopt cross-sell and provide incentives for frequent purchases. So, we really understand the importance of customer loyalty and satisfaction.


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