5 Myths About How To Improve Customer Loyalty

Many businesses struggle to grow organically, and it’s often because they’ve fallen victim to common misconceptions about customer loyalty.


Imagine not having to worry about where your next customer will come from.  Imagine not stressing about how to market and promote your business.  Imagine growing your company exponentially, at a speed you never thought possible.

The key to realizing these almost unimaginable outcomes lies in delivering a customer experience (CX) that is nothing short of magnetic.  An experience that cements people’s loyalty to your business, turning customers not just into frequent patrons, but also into brand ambassadors who can’t wait to rave about you to others.

Unfortunately, the benefits of a loyalty-fueled business elude many organizations.  In some cases, it’s because companies (and their leaders) harbor skepticism toward the true value of customer loyalty, relative to the investment required to cultivate it.  In other cases, organizations buy into the promise of customer loyalty, but stumble in their effort to create a customer experience that fosters it.

All of these missteps are rooted in some common myths about the mechanics of improving customer loyalty which, if left unchecked, will undermine even the most well-intentioned business strategy.


Myth #1: Satisfied customers are loyal customers.

Satisfied customers defect all the time.  In a widely-cited customer experience study, Gartner found that 20% of customers who said they were satisfied with a particular company also said that they planned to shift their business to another provider.  This is why customer satisfaction is really a one-way ticket to the business graveyard.  To cultivate true, long-term loyalty, businesses must do more than just satisfy customers – they need to impress them, thereby cultivating the repurchase and referral behavior that is the lifeblood of any thriving company.


Myth #2: Customer expectations are higher than ever.

While companies that excel in customer experience have arguably raised the bar for all others (known as the “Amazon effect”), the fact is that consumers have become somewhat numb to all of the incivilities that businesses inflict upon them (e.g., long 800-line hold times, understaffed stores, poor responsiveness).  Indeed, people have practically come to expect disappointment when interacting with businesses, as evidenced by recent Watermark Consulting research which found, for example, that nearly half of consumers are not at all surprised when they have difficulty finding someone to help them.  You read that right… consumers are essentially impressed when they call a business and a live person immediately answers the phone and effectively assists them.  What might have been termed a basic expectation in the past is now a source of delight — and a driver of loyalty.


Myth #3: Great customer service is the key to building customer loyalty.

In many types of businesses, the mere need for customer service indicates that something has gone wrong – a defective product, trouble with assembly, confusion over a bill, etc.  Even if the service experience is stellar, it doesn’t change the fact that the overall customer experience was flawed.  (After all, no one wakes up excited to call their health insurer, cable provider, credit card company, etc.)  Gartner found that when customers must invest time and effort in securing service, they are 400% more likely to then exhibit disloyal behaviors.  So, sure — your customer service might be great — but the fact that service was needed at all might actually erode loyalty rather than strengthen it.


Myth #4: A great, loyalty-building customer experience costs more to deliver.

When businesses shift their focus from delivering great customer service to delivering a great, end-to-end customer experience, the economic calculus changes significantly.  That’s because they start turning their attention to upstream issues that are driving downstream customer contact (e.g., poor expectation-setting at point-of-sale, complex product instructions, difficult-to-understand bills and correspondence).  When you improve those upstream touchpoints, it obviates the need for downstream customer service – which translates into a better, more loyalty-enhancing customer experience that can be delivered a lower cost.


Myth #5: There’s little proof that being good to customers is good for business.

Companies that offer a great customer experience outperform their less customer-centric competitors by an average 3-to-1 ratio in shareholder return, according to Watermark Consulting’s  Customer Experience ROI Study.  This is the ultimate quantification of the “loyalty lift,” making it clear that companies reap significant financial rewards when they elicit raves from their customers.  Conversely, companies that are rated as the worst in customer experience significantly underperform the broader market index.  So, not only is there a prize for impressing customers, there’s also a penalty exacted for disappointing them.


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Genuine customer loyalty (the kind that’s earned through experience, and not “purchased with points”) can propel a business forward unlike any other force – there’s no myth to that.  Avoid the five misconceptions outlined above, and you’ll be better positioned to capitalize on the loyalty lift that a great customer experience accords, thereby elevating your business to new heights.

[A version of this article originally appeared on Forbes.com.]


Jon Picoult is founder of Watermark Consulting, a customer experience advisory firm that helps companies impress customers and inspire employees, creating raving fans that drive business growth.  Author of “FROM IMPRESSED TO OBSESSED: 12 Principles for Turning Customers and Employees into Lifelong Fans,” Picoult is an acclaimed public speaker, as well as an advisor to some of world’s foremost brands.  Follow Jon on Twitter or Instagram, or subscribe to his monthly eNewsletter.


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