More Evidence Linking Customer Service to Loyalty

Recently I began reading a book by Dennis Snow called Unleashing

Excellence. Dennis is a guy who knows customer service. He spent 20 years

managing and teaching in the Disney empire. I like Dennis’ philosophy that

customer service is much more than trying to get employees to smile and be

nice. It’s about building a business that has a service culture.

In the first few pages Dennis shares some important data. He

says Lexus has a 63% repeat purchase rate. Compare this with most auto

companies that typically have a 30-40% repeat purchase rate. That’s significant

loyalty. And, as Dennis points out, Lexus is well known in the auto business

(and beyond) as a service leader. They set the standard in that industry.

Oh, and here’s something else. Even though Lexus accounts

for just 2% of Toyota’s

overall revenue, they contribute 33% of its profits. Service produces loyalty

which can greatly enhance profits.

From DestinationCRM.com:

"We're

finally seeing hard data proving the connection between customer experience and

customer loyalty, and what's emerging is a growing emphasis on improving

customers' experiences."

In this post

at DestinationCRM.com they discuss several studies which show this link. In one

of them, by Bruce Temkin of Forrester Research, says:

"What

we've done in this report is we've quantitatively tied together 'change of

customer experience' with 'the change of some loyalty factors.'"

The report he mentions measured customer experience and

customer loyalty using quantitative factors. It showed a direct link between increased

loyalty and improved experience of customers. And customer experience is a

direct result of how customers are treated and the quality and appropriateness

of the product or service they receive.

helps show the value of improving customer service. It can have a measurable

impact on the bottom line and the health of an organization.