June 27, 2017

Customer Loyalty Chart: Just how big of an effect does customer satisfaction have on loyalty?


If you’re a dedicated customer-first marketer, you’re working hard to improve the customer experience in your marketing and throughout your entire enterprise.

But this often requires budget, resources and buy-in — sometimes from a boss or client, or sometimes from a peer in another part of the organization.

So, to help you get that buy-in, this week’s data shows just how impactful a customer-first approach can be to customer loyalty.

(As seen in the MarketingSherpa Chart of the Week newsletter. Click to get a free subscription to the latest research and case studies from MarketingSherpa.)

by Daniel Burstein, Senior Director, Content & Marketing, MarketingSherpa and MECLABS Institute

It’s challenging to be a customer-first marketer and to run a customer-first business. For example, as Nelson D. Schwartz recently reported in a New York Times article about airlines, “relentless pressure [from Wall Street] on corporate America is creating an increasingly Dickensian experience for many consumers.”

So, if you’re fighting the good fight within your organization to get the resources, budget, strategy and mindset to put customers’ interests before the short-term needs of the business, here is some ammo you can use in your next presentation or discussion with key business leaders — data that shows the high cost of that short-term mindset.

In 2016, we asked 1,200 U.S. consumers to name a company they were highly satisfied with. We then asked another 1,200 to name a company with which they were NOT satisfied. We then asked both groups …

Thinking about [company name] how likely are you to do any of the following?

To see 35 charts from the study, download the free report.

Taking a customer-first marketing approach

“If I was their company, I would definitely take customers into consideration and put their needs first and their wants first and not turn them down when they're trying to return something. I had no control over what I got at my baby shower — such as [retailer name removed],” one survey respondent said.

When you hear customers discuss customer-first business and marketing principles, perhaps you get skeptical. After all, you can’t please everyone. Some customers are unreasonable. Or some customers are just upset or frustrated, and that undermines the clarity and credibility of their statements.

However, the above survey respondent’s advice correlates with some of our other research findings. Namely, the biggest differentiation between how satisfied and unsatisfied customers described a company’s marketing was around this idea of customer-first marketing. The top response from unsatisfied customers was “the company does not put my needs and wants above its own business goals.”

And, as we see in this week’s data, that same frustration with a company’s business and marketing practices that makes a customer unsatisfied can drive consumers to purchase somewhere else.

Satisfied customers much more likely to continue purchasing products and services

You probably expect satisfied customers would be much more likely to continue purchasing products. But when you look at the actual data in the chart above, a giant chasm exists between satisfied and unsatisfied customers’ loyalty.

Two-thirds (66%) of satisfied customers said they were very likely to continue purchasing products and services from the company they were satisfied with, while just 8% of unsatisfied customers said they were very likely to continue purchasing products and services from the company they were not satisfied with — a whopping 713% difference.

You can see a similar massive difference at the low end — with 35% of unsatisfied and just 2% of satisfied customers very unlikely to continue purchasing.

Looking past short-term marketing goals

In many marketing departments and advertising agencies around the country today, marketers are under the gun to produce some quick results this year … this quarter … maybe even this week.

If Maslow had a marketer’s hierarchy of needs, these short-term goals would be the food, water, warmth and rest a marketer needs. And it’s very hard to see the big picture when these goals are right in front of your face.

However, marketers must also keep an eye on the top of Maslow’s hierarchy — in this case, achieving a brand’s full potential — and the full potential for every brand and every company is to serve a customer.

So, the next time you’re in one of those short-term crunches or short-term meetings, don’t overlook that base level need. Without food or water, there is no long term.

However, try to think not only of what your company needs — the immediate conversion or sale — but put yourself in the customer’s shoes as well. As one survey respondent put it, “Always think what you can bring to the customer’s business.”

Related resources

Customer-First Marketing Chart: Why customers are satisfied (and unsatisfied) with companies

Marketing Charts: The channels your customers are most (and least) likely to disengage with

Route to Air Travel Discomfort Starts on Wall Street (by Nelson D. Schwartz in The New York Times)

We’re looking for inspirational stories of customer-first marketing for MarketingSherpa Summit 2018 in Las Vegas: MarketingSherpa.com/Inspire

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