John A. Larson and Bennett E. McClellan have been studying customer loyalty for decades, and they share their insights on how make money from loyal customers in “Capturing Loyalty.”
The central ideas of the book are: when measuring customer satisfaction on a five-point scale, only people who give your company the highest score, or “highly satisfied,” will become loyal customers, who make your business more money than casual customers do. But the only way to get customer loyalty is to satisfy your customers’ expectations each time your business has any contact with them.
These two propositions could fit on the back of a business card. Fortunately, the authors are great storytellers, and they pack the book with accounts of how businesses seized on, or ignored, the information about why their customers became loyal. (There’s even a chapter on how to tell stories so you can communicate better with your employees!) Larson and McClellan also present steps that your business can use to measure customer satisfaction, then focus on making more of your customers feel highly satisfied.
Those people who check the highest box aren’t just more likely to return, they’re also likely to increase how much they spend, to pay price premiums, to have your business at the top of their minds, and to recommend your business to others, the authors argue. They’re the ones who are going to have an effect on the bottom line.
The way to convert people from satisfied to highly satisfied, Larson and McClellan say, is to focus on removing the risk of unwanted outcomes when a customer deals with your company. You must meet their expectations every time. If something goes wrong, you have to fix it immediately.
The authors argue that when you pursue customer loyalty, you probably won’t please all of your customers or prevent every problem. Rather, you’ll likely make some tradeoffs that mean you’ll be focusing on converting satisfied customers (called 4s in the book) to highly satisfied (which the book calls 5s) and in maintaining high satisfaction. In the industries they’ve studied, they have found that businesses make more money by better serving satisfied and highly-satisfied customers, while focusing less on the less-than-
satisfied (called 1s, 2s and 3s).
Getting things right requires a commitment from every level of the organization for a loyalty initiative to succeed. Company management must make it a priority, and must support employees, especially those who are responsible for customer interactions. For some businesses that treat their employees as expendable and value a high turnover rate as a way of keeping costs down, that may require a change in attitude, the authors argue.
Those employees who have contact with your customers are the ones who can mitigate the risk of an unwanted outcome. They’re the ones who can make your customers loyal. Here the authors raise a tough question: if your business isn’t engendering loyalty from its employees, how likely are the employees to engender customer loyalty to your company?
If you like reading stories that identify how a business succeeded, you’ll enjoy this book. If you enjoy reading stories about business leaders ignoring good information and advice, then failing, you’ll also like this book. If you love footnotes, you’ll be pleased that the first word in the first chapter is footnoted.
Spending a day alone with “Capturing Loyalty” may just leave you highly satisfied.
How to Measure, Generate and Profit from Highly Satisfied Customers
By John A. Larson and Bennett E. McClellan
Praeger. 197 pages. No official price, but it can be found on Amazon for roughly $25