Customer Retention ≠ Customer Loyalty

Some marketers make the mistake of thinking that customer retention is the same thing as customer loyalty.

Not so.

Just because you have repeat customers does not mean those customers are loyal. Customers might continue to buy from you for a variety of reasons that don’t include loyalty. These could include:

  1. Convenience. They have been buying from you for years and aren’t inclined to change.
  2. Internal red tape.  The boss/manager says they have to keep buying from your company (no matter what…).
  3. Loyalty to your salesperson.  Maybe your customer has bonded to your salesperson and if that person leaves, maybe your customer will too.
  4. No competition….yet….   Don’t rest on your laurels too long if you don’t have any serious competition in your space yet. That can change overnight.
  5. Binding contract.  Perhaps your customer is bound to a contract or prepayment arrangement with you but is itching to tear up the contract when it expires and call your competitor.

To assume that buying customers are loyal customers is to take your customers for granted.  It is much more important to measure real customer LOYALTY based on the key Net Promoter Score question:

On a zero-to-10 scale, how likely are you to recommend this product or service to a friend or colleague?

At Client Insight Inc., we believe the best way to find out how your customers answer this question is not just with a number.  It is with a conversation. That is why we use telephone interviews so that after the customer says, “8”, we can ask, “Why an 8 and not a 9 or a 10?”  The ability to delve into that question gives your company the opportunity to find out information, feelings, experiences and opinions you cannot otherwise capture. Conversations with customers are the most effective way to not just measure customer loyalty, but understand the “why” behind it.

At Client Insight Inc., we track NPS for our clients on a monthly basis.  We help them recognize that customer loyalty is not measured by sales.  Sales are apples and loyalty is oranges. Finding out why your customers are or are not loyal is vital to your customer loyalty and retention. Customers who buy might not be loyal. But customers who are loyal will keep buying.

If you would like to learn more about how we sort out apples from oranges, give us a call.

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