Many managers in service industries who are trying to develop relationships with their customers believe that satisfying them is enough to create a committed customer base. It is true that satisfaction is important because it can lead to increased customer loyalty. But this is not the complete picture.

In fact, satisfaction levels in the U.S. often do not vary much between competing firms. This is supported by recent findings by the American Customer Satisfaction Index. Despite earning similar satisfaction ratings, firms in many industries do not enjoy the same level of customer loyalty and retention. To understand why, let's look beyond satisfaction.

Relationship-Seeking Customers

Customers will behave in a committed fashion only if they think it is appropriate to have a relationship with the firm or one of its employees. There is great diversity among customers in terms of their willingness to form commercial friendships. In a recent study, for example, while 4 in 5 clients had developed a friendship with their hairstylist, the remainder thought it was inappropriate to do so. A sizable minority of clients thought that pursuing a close relationship was improper.

At the heart of this finding was the fact that many customers did not think that mixing business with pleasure would be right. They reasoned that since customers are expected to pay their hairstylist and friendships do not usually thrive on the basis of money changing hands, it was wrong to define their interaction in terms of a friendship. These customers preferred to make their decisions about which stylist or barber to use on a day-by-day basis and chose not to concede the kind of personal or even intimate information that might have produced a friendship.

Identifying these customers in advance is difficult, but firms have to help themselves by learning to listen, even to those who avoid commercial relationships. One customer recollected her experience of receiving literally dozens of commercial solicitations from a credit card company over the course of a year. Viewing these mailings as inconvenient and wasted on her (she already had two credit cards and did not want more), she twice requested the removal of her name from their mailing lists. Several months after being reassured they would, she continues to receive frequent solicitations from the same company. As a result, she now feels ignored and disrespected, and at every opportunity she takes the time to tell her friends about her negative feelings toward the firm. Can firms afford to ignore the wishes of people who are not their customers?

There are other reasons customers avoid developing relationships with firms. It could be that the customer does not care much about the purchase decision and doesn't see much difference between brands or service providers. For example, a lot of people just don't want to think very hard about where to get their oil changed or where to fill up on gas. Unless their car is on fire, they certainly don't want to have more than a brief conversation with the attendee. This reality could be interpreted as a firm's failure to adequately differentiate its products, but it is still true that there are some products that customers have a hard time getting excited about.

Other people quickly get tired of buying the same thing and will try new brands just for the sake of variety. Experiencing the same thing, like listening to the same music selection or eating the same meal all the time, bores them. With people wanting variety, there often isn't a commitment to any one place of business, so relationships don't have time to develop and firms don't have a chance to learn how to serve the customer better.

Avoiding a relationship could be related to a person's concerns over privacy. In order to behave in a loyal way, customers are often asked to share information about themselves. Why do many video rental stores 'need' a customer's social security number, and why do many electronics stores ask for a home phone number when paying cash for batteries? Many people don't trust companies enough to be so forthcoming. Clearly, it's an issue many people care about, for why else would credit card companies now be offering "no telemarketing" cards? For firms who don't protect their customers' privacy, or observe other important customer values, it will not be possible to keep or woo customers in a commercial relationship.

Investment

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