"Customer satisfaction is not the same as customer loyalty." - Vicky Lenz
Customer loyalty - it's a phrase we hear repeatedly, yet its meaning is still often confused. For some, customer loyalty means customer satisfaction. For others, customer loyalty refers to the amount of money a client spends at their place of business.
While the idea encompasses both of these views, we need to take the concept one step further to see its real payoff: customer referrals.
A recommendation is perhaps one of the strongest signs of loyalty, because making a referral goes beyond being satisfied. A customer who makes a referral is putting his own reputation on the line--and takes this risk only if he is loyal.
Fred Reichheld, author of the book The One Number You Need to Grow, said that "customer loyalty can be measured by asking customers a single question: How likely would you be to recommend our company to a friend?" By gauging the responses he believes it is possible to predict how fast a firm will grow compared with its competitors. His research shows that the percentage of customers enthusiastic enough to refer a friend or colleague correlates with differences in growth rates among competitors in many industries.