The Psychology of Customer Loyalty

Loyal customers are those who feel a strongly held commitment to re-buy or re-patronize a specific product, service or company. They are considered a company’s biggest asset as besides providing repeat business, loyal customers spread positive word of mouth that can be up to twenty times more powerful than regular advertising. Loyal customers might be highly coveted but they are also hard to come by. Many companies attempt to improve customer loyalty by offering reward programs and other such incentives or by focusing on enhancing the customer experience. But while reward programs might increase repurchasing motivation in the short term but they cease to do so as soon as the program ends because they do little to change how customers feel about the company.

Customer loyalty occurs because customers’ purchasing behaviors become driven by their feelings for the company, not vice versa. Targeting customer behaviors while neglecting the emotional component of customer loyalty is a mistake far too many companies make.

A successful customer loyalty strategy must establish opportunities for a company to forge deep and personal connections with their customers. Fortunately, companies are provided perfect vehicles to create exactly this kind of relationship change—when customers voice complaints.

Psychologically speaking, complaints represent a rupture in the bond between the customer and the company that places their relationship in crisis. Crises are pivotal times for all relationships because they can be damaged beyond repair if handled poorly. But demonstrating the skills and care to mend the rupture and overcome the crisis actually makes the relationship stronger because doing so leads to a dramatic increase in trust.

Trust is the foundation upon which loyalty is built. Once we trust that a person or company can work with us to resolve a crisis, we automatically feel more loyal to them. By providing excellent complaint handling and service recovery procedures to their customers, companies can mend the relational rupture, prove their trustworthiness and increase customer loyalty.

Indeed, studies repeatedly demonstrate that successful service recoveries make customers more loyal to a company than they were before they ever encountered a problem. In addition, customers typically relate stories of successful service recoveries to numerous friends and acquaintances, providing excellent word of mouth for the company in question.

Companies that want to increase customer loyalty should therefore make it as easy as possible for their customers to complain. In addition to gaining vital information about potential problems, excellent service recoveries enhances customers’ confidence and trust, deepens their emotional connection to the company and dramatically increases their customer loyalty.

Copyright 2011 Guy Winch

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