Part Two of Three: Customer loyalty
Last month, we set the foundation for building customer loyalty.
We left off by presenting the Interrelationship Diagram.
Now, let''s explore each of these elements.
Customer expectations are determined by past experiences of the customer and their predictions about future experiences.
This experience is drawn from direct interaction with the service, publicly available information, and the expert opinions of others.
These experiences create a sphere of future expectations for results, reliability and requirements, within which the customer predicts how well the service will perform.
This soft metric establishes the yardstick and foundation for the customer''s perception about the quality of service.
In general, the higher the expectation, the lower the satisfaction.
This is an important element and should be the subject of real study as a basis for influencing customer satisfaction.
It is at this level of study that the attributes important to the customer will be defined.
And, these are some of the factors that will ultimately drive loyalty.
Perceived quality is a measure of how well the product or service meets customer expectations.
The ability to measure perceived quality allows us to understand the customer''s perceived value for the service delivered.
This is a soft measure, based on how the customer "feels" about quality.
Customer satisfaction is a soft metric describing how customers feel when they compare their expectations to the quality they observe.
Customer expectations, perceived quality, the effectiveness of the response to complaints, and other uncontrollable factors are determinants of customer satisfaction.
And, while the measurement of customer satisfaction has an impact on the terminate-retain decision, it is a weak connection overshadowed by the more powerful customer loyalty metric.
Customer perceived value
Customer-perceived value is determined by the customer''s framework of expectations and their perceptions about quality, at a given price.
This soft metric is very influential in the decision-making process for hiring a contractor.
Beyond this initial value, customer-perceived value is a predictor of hard metrics like complaints, letters and penalties.
Customer complaints are a hard measure, describing what people do versus how they feel.
When perceived quality is poor, customers are generally not satisfied and responsiveness to problems is ineffective and the probability of complaints — negative letters and penalties — becomes likely.
Not withstanding the role of other uncontrollable factors, customer satisfaction has an inverse relationship to customer complaints.
Customer loyalty is a powerful, hard measure of what customers do about the contract relationship.
High customer loyalty greatly increases the likelihood of contract renewal; low customer loyalty is a precursor to contract termination.
Customer loyalty is influenced by customer satisfaction, customer complaints, and perceived value, as well as the causal factors influencing them.
While these elements interact in different ways depending on the type of customer, each is important to understanding customer loyalty.
From the Interrelationship Diagram, it is also useful to understand that, in general, soft measures are a predictor of hard measures and hard measures are a predictor of customer loyalty.
Even with this understanding, how do we influence the factors that ultimately determine customer loyalty?
In the conclusion of this discussion (to be featured in January 2009*), we will offer ways to influence customer loyalty, how to measure success, and draw conclusions.
* Editor''s note: CM/Cleaning & Maintenance Management''s December 2008 issue is our annual Buyers'' Guide.
Vincent F. Elliott is the founder, president and CEO of Elliott Affiliates, Ltd. of Hunt Valley, MD, www.ealtd.com. He is widely recognized as the leading authority in the design and utilization of best practice, performance-driven techniques for janitorial outsourcing and ongoing management.