Customer Loyalty: The Holy Grail of the Service Industry

Let's talk about customer loyalty for a moment. It's the holy grail. Everyone talks about it, and everyone understands that, at the end of the day, loyalty is the only sustainable competitive advantage in an overcrowded market.

So far, so good.

The pickle comes from how loyalty is actually achieved.

Let's review the fundamentals.

There is no loyalty in basic satisfaction. When we deliver the right service at the right price, on time - exactly as we said we would, we get 3, maybe 3.5 on a 1 to 5 Likert scale. And that is not enough to get any kind of loyalty. Loyalty results from an emotional component in addition to flawless execution.

The Emotional Component of Loyalty

What do I mean by that? Loyalty in the service industry happens when one of our employees manages to make a meaningful connection with our customers. Good luck putting 'you must at all times make meaningful connections' in the KPIs of your employment contracts. It won't happen. Employees make meaningful connections with your customers when they feel like it, when they are in a good space, and when their motivation is high.?

We call that engagement.

Ah, you may be thinking, we must work on employee satisfaction. Unfortunately, that won't help you much either. There is no engagement in basic employee satisfaction. Thousands of employees come to work in service businesses—probably also in yours every day—and they are reasonably satisfied with their jobs. In fact, when we provide a stable job, fair pay, reasonable hours, paid leave, etc., we get a 3 maybe 3.5 on a 1 to 5 Likert scale.?

There is no engagement in basic satisfaction.

Engagement vs. Satisfaction

Now, think of this from the customer's perspective. What is the difference between being served by someone who just has a job and someone who is truly engaged in what they do? Simple, isn't it? There is a world of difference. And then that difference is what produces loyalty.

So, if you want to improve your NPS score, you first need to understand that a high engagement score is the driver of a high NPS score in service businesses. That is where we need to start—that is the foundation.

Building Employee Engagement

Engagement is not about basic hygiene factors such as pay, workshops, uniforms, etc. Engagement is a result of connection, a sense of belonging, and being valued. For most employees, the source of this engagement is the relationship they have with their immediate supervisor.

This is why it makes a lot of sense to help your managers develop their leadership capacity if you want to improve your NPS score. Investing in your leaders creates an environment where employees feel connected and appreciated, leading to genuine engagement and, ultimately, customer loyalty.

Always happy to have a conversation about that if you would like to explore this further.

PS If you are finding this useful - please share it with your colleagues

...and do check out my free library section if you would like to sharpen your leadership skills

?? See you in the next issue

#engagement #leadershipdevelopment #Humanresources