Improve your customer relationships

Summary

In this video, Tom explores the dynamics between customer satisfaction and loyalty, emphasizing their importance for businesses. He explains that satisfaction is an emotion while loyalty is a behavior, and uses a graph to illustrate their relationship. Tom discusses different customer types across various quadrants, highlighting strategies to manage and improve customer relationships. He suggests a three-step process for businesses to understand and enhance satisfaction and loyalty, ultimately aiming to create advocates. For more detailed insights and resources, viewers are directed to Tom's website.

Takeaways

• 😀 Customer satisfaction and loyalty are crucial for encouraging customers to spend more time and resources on your offerings and to become advocates.
• 🔒 The difference between satisfaction and loyalty is that satisfaction is an emotion while loyalty is a behavior.
• 📈 A graph can illustrate the relationship between satisfaction (vertical axis) and loyalty (horizontal axis), showing different customer types in each quadrant.
• 👶 The bottom left quadrant includes new customers who have no experience yet, and their perception needs to be managed for repeat business.
• 😠 The bottom right quadrant has frustrated customers who are difficult to win back due to negative experiences.
• 😞 The left side of the graph represents dissatisfaction, with customers who are generally grumpy and may not be worth retaining.
• 🔒🔑 The top left quadrant shows loyal but unhappy customers, often due to feeling trapped by contracts or lack of choice.
• 💻 The top right quadrant includes highly satisfied customers who are not loyal, indicating a lack of product or service differentiation.
• 🍏 Apple is highlighted as an example of building loyalty through excellent products and additional services that create a 'walled garden'.
• 🛠️ The three-step process involves internal understanding, customer communication for reality check and expectation management, and planning for improvements.
• 🔄 Continuous tracking and understanding of customer needs and expectations are essential as they evolve over time.

Q & A

What is the main focus of Tom's presentation?

The main focus of Tom's presentation is the concept of customer satisfaction and loyalty, and how understanding and controlling these elements can encourage customers to spend more time and resources on the products and services offered.

Why are customer satisfaction and loyalty important for a business?

Customer satisfaction and loyalty are important because they encourage customers to return more often, potentially become advocates for the brand, and promote the products and services to others.

What is the difference between customer satisfaction and customer loyalty according to the script?

Customer satisfaction is an emotion, where customers feel happy and believe they are receiving good quality service. Customer loyalty, on the other hand, is a behavior, reflecting whether customers come back and purchase more or use the service again.

How does Tom suggest visualizing the relationship between satisfaction and loyalty?

Tom suggests visualizing the relationship between satisfaction and loyalty on a graph with satisfaction on the vertical axis and loyalty on the horizontal axis, creating four quadrants to represent different types of customer relationships.

What types of customers are found in the bottom left quadrant of the graph?

The bottom left quadrant represents customers who are completely new to the product or service, with no experience or idea about their happiness or likelihood of using the product or service again.

Why might customers in the bottom right quadrant be unhappy and yet remain loyal?

Customers in the bottom right quadrant may remain loyal because they feel trapped in the relationship due to limited choices or contractual obligations, even though they are unhappy with the product or service.

What does the top right quadrant of the graph represent in terms of customer satisfaction and loyalty?

The top right quadrant represents customers who are very satisfied with the product or service but are not loyal, meaning they may not return to the same brand or product in the future.

How does Apple differentiate itself and build customer loyalty according to the script?

Apple differentiates itself and builds customer loyalty by offering excellent products with a good feature-to-price ratio and by providing additional services such as iTunes, Apple Cloud, and quality and security guarantees that create a 'walled garden' of services that are difficult to leave.

What is the three-step process Tom outlines for applying the concept of satisfaction and loyalty in a business environment?

The three-step process includes: 1) Working internally to understand the full scope of satisfaction and loyalty and how different elements of the product and service affect customer relationships. 2) Talking to customers to get their point of view and manage their expectations. 3) Bringing the customer feedback back into the organization to plan and implement changes to improve the relationship.

Where can viewers find more information on customer satisfaction and loyalty as presented by Tom?

Viewers can find more information, including a written text, templates for sales teams or customers, and a PowerPoint file, on Tom's website, B2B dt.com.

Outlines

00:00

🤝 Understanding Customer Satisfaction and Loyalty

This paragraph introduces the concept of customer satisfaction and loyalty, emphasizing their importance in encouraging customers to invest more in a company's offerings and return frequently. It highlights the potential for customers to become advocates, spreading the word about the company's products and services. The speaker, Tom, outlines the flexibility of this concept, noting its relevance across various sectors, including business-to-consumer, business-to-business, and nonprofit. He also touches on the significance of understanding the relationship between the company and its customers, setting the stage for a deeper dive into the differences between satisfaction and loyalty.

05:00

📊 The Relationship Between Satisfaction and Loyalty

The speaker explains the distinction between customer satisfaction and loyalty, likening satisfaction to an emotion and loyalty to a behavior. He uses a graph to illustrate the relationship, with satisfaction on the vertical axis and loyalty on the horizontal. The graph is divided into quadrants representing different types of customers based on their satisfaction and loyalty levels. The bottom left quadrant includes new customers with no established opinion, while the bottom right features frustrated customers who are difficult to win back. The top left shows customers who are unhappy but repeatedly use the service due to a feeling of being trapped, often due to internal company relationships or restrictive contracts. The top right quadrant highlights customers with high satisfaction but low loyalty, indicating a lack of product differentiation. The speaker suggests strategies for dealing with these different customer types.

10:02

🔒 Creating Lock-in and Differentiation for Loyalty

This paragraph delves into the reasons why some customers, despite being unhappy, continue to use a product or service. The speaker discusses the concept of 'lock-in,' where customers feel trapped due to contractual obligations or a lack of alternatives. Examples include internal company services with no choice of provider and mobile phone contracts that restrict customer freedom. The speaker also addresses the top right quadrant of the graph, where high satisfaction does not translate to loyalty due to the absence of product differentiation. He points out the importance of offering additional services, like Apple does with iTunes and iCloud, to create a sense of lock-in that fosters loyalty.

🛠️ Applying the Satisfaction and Loyalty Concept in Practice

The final paragraph outlines a three-step process for applying the satisfaction and loyalty concept in a practical setting. The process begins with internal work to understand the scope of satisfaction and loyalty and how different elements of the product or service affect customer relationships. The second step involves gathering customer perspectives to validate internal understanding and manage expectations. The third step is planning and implementing changes to improve the customer relationship based on the insights gathered. The speaker emphasizes the importance of regularly revisiting this process to keep up with evolving customer needs and expectations, and he invites viewers to visit his website for more detailed information, templates, and resources.

Keywords

💡Customer Satisfaction

Customer satisfaction refers to the contentment level of customers with a company's products or services. It is an emotion that indicates whether customers believe they are receiving good quality and service. In the video, satisfaction is depicted as a critical factor in determining if customers will return to use the same products or services, and it is distinguished from loyalty by being a feeling rather than an action.

💡Customer Loyalty

Customer loyalty is the consistent repurchase of products or services from a particular company, reflecting a customer's repeated patronage. The video emphasizes that loyalty is a behavior, showing that loyal customers not only feel satisfied but also act on that feeling by returning to the company for more purchases.

💡Advocates

Advocates are customers who are so satisfied with a company's offerings that they actively promote them to others. In the context of the video, advocates are seen as the ideal outcome of customer satisfaction and loyalty, as they not only continue to use the products or services but also help spread positive word-of-mouth, thereby attracting new customers.

💡Differentiation

Differentiation in the video refers to the unique features or qualities that set a company's products or services apart from competitors. It is important for creating loyalty because, without differentiation, customers may not see a reason to return to the same brand, as they perceive no difference between offerings.

💡Satisfaction vs. Loyalty

The video script highlights the distinction between satisfaction and loyalty, explaining that while satisfaction is about how customers feel, loyalty is about what they do. This distinction is crucial for understanding customer behavior and the steps companies need to take to move customers from mere satisfaction to active loyalty.

💡Graph

In the video, a graph is used as a visual tool to illustrate the relationship between customer satisfaction and loyalty. The vertical axis represents satisfaction levels, and the horizontal axis represents loyalty. The graph is divided into quadrants to represent different types of customer relationships, helping to clarify the dynamics between how customers feel and what they do.

💡Internal Customer

An internal customer refers to individuals within a company who rely on other departments for services or support. The video mentions that internal customers can also experience satisfaction or loyalty, and it's important for companies to manage these relationships carefully, especially when there is no choice but to use internal services.

💡Contractual Lock-in

Contractual lock-in is a situation where customers are legally bound to use a service for a certain period due to a contract. The video uses mobile phone contracts as an example, where customers may feel trapped and express dissatisfaction, potentially leading to negative word-of-mouth once the contract ends.

💡Choice

The concept of choice in the video relates to the availability of alternatives for customers. When customers feel they have no choice but to use a particular product or service, it can lead to dissatisfaction and a lack of loyalty. Conversely, when customers have a range of choices, it can foster a more positive relationship with the brand they choose.

💡Additional Services

Additional services are extra offerings provided by a company on top of its core products. In the video, Apple is cited as an example of a company that uses additional services like iTunes and iCloud to enhance customer satisfaction and build loyalty by creating a comprehensive ecosystem that is difficult for customers to leave.

💡Expectations Management

Expectations management involves aligning customer expectations with the reality of what a company can deliver. The video script suggests that by understanding and managing customer expectations, companies can ensure that their customers' perceptions match the actual quality of the products and services provided, which is essential for building and maintaining customer loyalty.

Highlights

Tom introduces the concept of customer satisfaction and loyalty, emphasizing their importance for business growth.

Explains how understanding customer satisfaction and loyalty can encourage customers to spend more time and resources on products and services.

Discusses the potential for customers to become advocates, promoting the business to their network.

Describes the flexibility of the concept, applicable to various sectors including business-to-consumer, business-to-business, and non-profit.

Stresses the importance of the internal and external customer relationship and the role of influencers and politicians.

Introduces a method to differentiate between customer satisfaction and loyalty, highlighting the difference between feeling and action.

Uses a graph to illustrate the relationship between satisfaction and loyalty, with satisfaction on the vertical axis and loyalty on the horizontal.

Analyzes the bottom quadrant of the graph, identifying new customers, frustrated customers, and those who are generally dissatisfied.

Suggests strategies for dealing with customers who are difficult to satisfy and may not be desirable for the business.

Describes the left quadrant of the graph, where customers are loyal but unhappy, often due to feeling trapped in a relationship or contract.

Mentions the importance of reassurance for customers who feel locked into a service due to limited choice or contracts.

Examines the top quadrant, where customers are highly satisfied but not loyal, indicating a lack of product or service differentiation.

Points out that Apple has successfully created loyalty by offering additional services that enhance the customer experience and lock-in.

Advocates aim for the top right quadrant where customers are both satisfied and loyal, becoming brand advocates.

Outlines a three-step process for applying the satisfaction and loyalty concept: internal work, customer communication, and planning for improvement.

Encourages regular revisiting of the process to adapt to evolving customer needs and expectations.

Provides resources for further learning, including a detailed written text, templates, and a PowerPoint file on the website B2B dt.com.

Concludes the video with a hope that the information provided is valuable and encourages viewers to explore the process further.

Transcripts

hello ladies and gentlemen my name is

Tom and today we're going to look at a

concept about customer satisfaction and

Customer Loyalty if you can get more

understanding and more control over

these two elements then you will

encourage your customers to spend more

time and resources on the products and

services that you're offering they'll

also come back more often to use those

particular products and services and in

ideal situations they'll become

Advocates and go out and tell their

friends and colleagues all about what

you're offering and encourage them to

use your products and services as

well you'll find it's an extremely

flexible tool as well you can use it in

product or service sales or a

combination of both in business to

Consumer business to business and

nonprofit it's relevant for the internal

customer and the external customer and

it'll be important for influencers

people who work on YouTube for example

and

politicians so it's an extremely

flexible concept and from my experience

one of the most important concepts of

understanding the relationship ship

between yourself and the people that you

serve so let's step off now first of all

understanding the concept and then

looking at the process of how to use

this concept in the work

environment so the first thing you need

to do to get more control over customer

satisfaction and customer loyalty is to

ask yourself an important question

what's the difference between customer

satisfaction and Customer

Loyalty the difference between

satisfaction and loyalty is the

difference between feeling and action

satisfied customers are happy they

believe they are getting good quality

service it's an emotion whereas loyalty

is behavior it's what people do do do

they come back and purchase more do they

use the service

again to understand the relationship

between satisfaction and loyalty I'm

going to put them on a graph where

satisfaction is on the vertical access

going from unhappy dissatisfied

customers to very happy satisfied

customers and on the horizontal AIS I'm

going to put loyalty from very low

loyalty people who will not return to

use the product or service compared to

very loyal customers who come back again

and again and again what you'll find is

that there's a different relationship

between the seller and the customer

depending on which quadrant of this

graph that the relationship actually

exists

inside down in this bottom quadrant down

here you have three different kinds of

customers

the first kind right down in the bottom

corner are customers who are completely

new to your product or service they have

no idea how happy they are or if they

will use the product or service again

they've got no

experience so as a sales organization

you're doing a lot to actually manage

their perception of the service so that

they're happy and that they want to come

back for

more the other group of customers who

appear in this area who are people who

are really frustrated and really angry

with the service or the product you've

offered them because you've done

something terrible to really um hurt or

dissatisfy them so it's going to be very

very difficult to win these people back

to get them using your product or

service

again the third group of customers who

fit in this area here are just people

who are just grumpy and dissatisfied

about everything anyway it doesn't

matter what you do to look after them or

to keep them bound into your services

they're going to hate you and your

product and service anyway the major

question there is do you really want

these people as your customers what can

you do to actually get rid of

them let's move our attention to this

quadrant of the grid this is where

people are very loyal they use the

product or service again and again and

again but they really don't like it

they're extremely unhappy with the

product or service now people typically

fall into this area for two reasons that

is because they're locked in to the

relationship or there is no choice in

both situations people feel trapped they

feel like hostages and human beings

don't like to be forced to do certain

things

so when they they do everything they can

to get out of these relationships

they're unhappy with it and they tell

people and when they're freed from the

relationship they have their Revenge

they go out and celebrate and they tell

people how terrible the product or

service

was there are different situations why

people feel locked in to

relationships one of the most typical

places is with the inter internal

customer basically inside a large

company one Department must buy services

from a different department if you think

about it software support so you're

working on your computer something goes

wrong with it you must call that one

particular helpline you don't have any

choice you're locked in to this

relationship now it doesn't matter how

good the service actually is because you

feel trapped because you can't compare

it to any other service providers

there's a good chance that people are

going to start complaining about it so

if you provide an internal service

inside an organization it's very

important to put a lot of effort into

telling people why they can be happy

about the service to increase their

satisfaction the other reason people

feel locked in

is because of very very tight

contracts one example is with mobile

telephones now in some countries in some

relationships you sign a 2-year contract

when you get your telephone so it

doesn't matter how good the service is

there's no way you can actually escape

and get out of that service you have to

use it for the two years of the contract

or you lose a lot of money when you try

and step out of it

the consequence there is at the end of

the two years when finally you're freed

from the contract you Revenge you go out

there and you tell everybody how

terrible this organization really is so

if you're a company whose business model

depends on limiting People's Choice

again you need to put a lot of effort

into reassuring them that they can be

happy with the

service the other area we see is when

people have got a lack of

choice so if you think about uh notebook

computers and operating systems

typically you've got the choice between

Windows from Microsoft the Apple iOS

systems and if you'll really love your

software and like playing with it Linux

this means that the majority of

consumers get stuck with either Apple or

Windows now some people make an act

active choice chice to pay a little bit

more and get the complete Apple service

but for those of th those of you left

over who don't want to go into the

Walled Garden of Apple suddenly you're

stuck with Windows and there's nothing

else you can choose from so again it

doesn't matter how good Windows is about

the quality of what it's offering people

are always complaining and griping about

Windows because they feel

trapped if we look at this quadrant up

here we've got very very high satis

isfaction people are very happy with

what they're getting but they're not

loyal so the next time they come to

purchase they won't go back to the same

brand or the same product again the

reason is that there's no

differentiation there's no difference

between all the products and services

you can buy up in this quadrant if you

think about computers typically when

people buy a computer they compare

features to price and then make a choice

so when they come to buy a new computer

they go through this process again

features the price and they won't

necessarily return to a specific brand

because there's no difference between

them if you're prepared to pay a certain

price that is with the exception of

Apple because Apple has worked very very

hard on providing excellent products

which Pro which provide a good feature

to price ratio but also by keeping

people very low oil by offering a whole

series of additional services on top of

the raw Hardware these are Services

things like iTunes for example they've

got the Apple Cloud solution is another

one um the way you buy apps over Apple

they provide a lot of quality and

security guarantees so all of these

things add extra features which no other

single manufacturers can competing

against and to move people into the area

of loyalty because once you're in iTunes

it's difficult to get out of it once

you've uploaded all your data and

photographs to the Apple Cloud it's very

time consuming to step out of that cloud

solution and transfer all your data to

somewhere else so what Apple has done is

they provide an excellent product or

service just like everybody else but

they've built loyalty by offering a lot

of additional Services which have got

elements of quality you know

satisfaction but elements also of lockin

keeping people inside this

relationship now the majority

organizations aim to keep their

customers in this quadrant it's the

ideal place to be and of course right up

in this very very top corner here you've

got your Advocates people who love your

servers so much who come back again and

again and again that they actually sell

for you they'll go out and they'll tell

their friends and colleagues just how

wonderful you

are so we've used this grid to

understand the relationship between

satisfaction and loyalty the next step

is to apply this to reality how do we

use this concept well there's a

three-step process the first step is to

work work internally so you yourself and

your

organization understands the full scope

of satisfaction and loyalty and which

elements of the product and service

you're offering affect the different

quadrants of this

relationship the second step is to

actually talk to your customers and do

the same thing except getting their

point of view you do this first of all

to check reality to check is your

understanding the same as what they

think and secondly is to actually manage

their expectations to ensure they're

realistic once you've gathered their

opinion then you bring it back into your

organization and plan and Implement

whatever changes you would like to make

to improve that relationship now

obviously you go through this process

many many times on a regular basis

because customer needs and customer

expectations are always developing over

time and it's very important that you

track and understand those that

development so that you can ensure your

product or service actually moves with

it if you'd like to find out more about

satisfaction and loyalty then visit my

website B2B dt.com there you'll find a

written text which goes into even more

detail than this video it also describes

the process process you'll find

templates which you can use with your

sales teams or customers and there's

even a PowerPoint file where you can add

your own logos or whatever you like

depending on what your needs are so I

hope you enjoyed this video I hope you

found it very very valuable and let's

move on to look at the process