Everyone knows that there is often a big difference between what people say and what they actually do. Take customer satisfaction surveys, for example. Companies invest significant time and resource in measuring the satisfaction levels of customers, but achieving positive satisfaction ratings does not necessarily correlate with actual customer behaviour: ideally low customer defection or attrition rates, measurable through transactional data. It is definitely possible for customers to be disloyal to a brand or company despite being highly satisfied with the end product. But why?

There is a clear distinction between customer satisfaction and customer loyalty, which are two vastly different concepts. Customer satisfaction is a self-reported metric that is backward-looking, one where customers rate how happy they were with their last end product, service, or transaction. Customer loyalty, however, is a forward-looking indicator of future behaviour that can be calculated from transactional data, but, more crucially, is deeply rooted in customers’ emotions. Loyal customers experience a strong emotional connection with a brand or business, which is the biggest influence on purchasing behaviour.

A good example of this contrast is in home improvements, a sector in which Pragma has worked extensively over the course of 2015, from general and specialist furniture brands to home improvement service providers. Our research has highlighted that, fundamentally, the provider of choice is selected because the product offered is in the right colour, material, and design; with other softer service features, such as customer service or aftercare, being secondary. You wouldn’t pick the friendly, highly rated local company down the road if they ultimately didn’t stock the bright orange, uPVC casement windows that will match your bright orange living room, would you? Despite being unhappy with longwinded sales pitches, incompetent service representatives, or intrusive, unpleasant installation experiences from large, national businesses, customers will still buy from them if they have the right product.

Here lies the disconnect between end product and purchase experience satisfaction, of which the latter is the crucial driver of advocacy, referrals, and repeat business. Furthermore, if smaller businesses start upping their game in terms of range and pricing, then those softer service features mentioned earlier become the differentiating factors of the customer’s decision process, who is now presented with competitive alternatives.

It is very easy to fall into the common trap of confusing satisfied customers with loyal customers; the solution is to isolate the real meaning of each and its implications, and use it to your advantage. For example, satisfaction measures can be more useful when broken down into the various elements of the purchase journey: the initial contact, the sales / service process, the follow up; and subsequently responding to and resolving red flags in a timely fashion. Lastly, don’t forget to keep a close eye on customer churn data, which can be highly beneficial in terms of driving highly targeted, individualised marketing campaigns that can really boost retention rates.

Kat Yeh