Loyalty versus Satisfaction - What's the Difference?

Satisfaction will not tell you if your customers will defect or your association members will drop their memberships.

Loyalty measurement captures the voice of the customer; their expectations and your performance against those expectations, as well as what you need to do to improve. Unlike satisfaction, loyalty encompasses the total customer experience; giving you a foundation for better decision making and action planning.

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Defining Customer Loyalty

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The Loyalty Research Center Model

The Loyalty Research Center has developed a hierarchical model of loyalty that helps companies understand from their customers’ perspective what it takes to drive business success.

Our model shows how daily interactions between customers and providers drive overall company perceptions that lead to attitudes of loyalty (or not) and behavior.

While every Loyalty Research Center study is tailored to our clients’ business and measurement objectives, the model serves as a framework or guide. Survey questions are built around each level of the model and are designed to elicit both strategic and tactical information.

Understanding how customers perceive performance on each level of the model, and measuring the relative ‘quantitative’ impact of each on overall scores and loyalty are the keys to identifying critical actions to take. Download the Loyalty Research Center’s Customer Loyalty Hierarchical Model to view the different levels.

Loyalty Segmentation

In addition to understanding what actions to take, the model identifies three different levels of loyalty: loyal, neutral and vulnerable. The loyalty metric, tested over time and against actual customer behavior, is the strongest indicator of the customer/provider relationship.

Understanding which customers are loyal, and which ones are neutral or vulnerable, allows companies to focus on retaining their loyalty; or, in the case of the neutral or vulnerable customer segments, taking action to migrate them to higher levels of loyalty.

Upward migration of customers from one loyalty segment to another will positively impact business success. The loyalty framework provides the basis for identifying which aspects of the customer relationship need to be addressed.