Loyal customers are a businesses’ greatest asset. They are also repeat customers who spread great word of mouth. But what is it that makes a customer become loyal to a business?
Loyalty Over Time
Loyalty in relationships of any kind is something that is typically built over time and experience.
Businesses usually employ a variety of programs to create customer loyalty such as reward programs (e.g., customer loyalty cards), extended warranties or product/service guarantees, low interest rates and other long term incentives. However, those only go so far. A better way to create customer loyalty is to consistently offer reliable products or services that are readily available at the right price points, and couple those with excellent customer experience. Over time, such efforts will do much to win over the hearts of their customers.
However, while all the above approaches are effective to one degree or another, there is a much faster way for companies to create customer loyalty; by providing excellent complaint handling and service recovery practices.
Loyalty Based on Trust
Loyalty, from a psychological perspective, is about trust. And as far as relationships go, trust is most apparent in times of crisis. Crises test relationships and tell us much about the quality and nature of our bond with that person. When a friend ‘has our back’ in an argument with a third party or when a colleague stands up for us in a meeting, it makes us trust them more and as a consequence, we feel instantly more loyal to that person.
Psychologically speaking, our expectations and beliefs about relationships tend to be stable. They hold true whether we are ‘relating’ to a person or to an ‘entity’ such as a brand or a company. When we encounter a problem with a product or service it creates a ‘crisis in our relationship’ with the company or business in question. The question then becomes, does the company ‘have our back’?
Companies that handle complaints to our satisfaction and certainly those that exceed our expectations dramatically increase our trust in them which sparks a surge in our loyalty to the company in question. Research confirms these assertions as customers whose complaints are well-handled have been found to become even more loyal to the company than they were before they encountered a problem. Such customers tell many friends and acquaintances about their positive experiences and provide excellent word of mouth for the company that ‘did them right’.
How to Earn Customer Loyalty
The bottom line is that companies should do everything in their power to elicit complaints from their customers. A complaining customer not only offers important information about your company’s products, services or procedures, but they provide companies with a virtual entry ramp to the Customer Loyalty Expressway.
About the Author
Guy Winch Ph.D. is a psychologist and author of The Squeaky Wheel: Complaining the Right Way to Get Results, Improve Your Relationships, and Enhance Self-Esteem (Walker and Company, 2011). He can be reached through his website at www.guywinch.com