The Connection Between Great Customer Experience and Customer Loyalty

Ask any CEO, Senior Leadership Team, or Executive about the importance of customer experience (CX), and you’ll hear the same answer: “It’s critically important.” But if you then ask them to provide the data that measures their performance in service excellence, you’re likely to be met with silence. As W. Edwards Deming wisely said, “Without data, you’re just another person with an opinion.” And we all know the true value of opinions, especially when they aren’t backed by facts.

Customer loyalty is fundamental to any business’s bottom line, not only for growth but for accurately forecasting future revenue. Yet, very few leaders can give a clear, data-driven answer on the state of their customer loyalty. From my experience working with hundreds of companies to develop their CX processes, the vast majority had no precise measurement of customer goodwill, nor strategies in place to protect it.

The Overlooked Assets: Your Team and Your Customers

There are endless distractions in today’s business world. Leadership teams are often stretched thin, with little time to reflect on their two most valuable assets: their team and their customers. For a company to have a clear view of its CX, it needs to engage the entire team, ensuring that everyone understands their role in protecting and enhancing the customer experience. After all, CX is essential for protecting future revenue, and your team are the custodians of repeat business and your reputation..

However, many companies are still confused about what defines an excellent CX process and why it’s crucial. There are countless theories and approaches, yet few offer the data needed to predict customer behaviour accurately. But when it comes down to it, we all know from our personal experiences as consumers: we return to businesses that value us and avoid those that don’t. Companies that offer great service earn our loyalty, while those that fail us are quickly forgotten.

Amazon’s Model: Obsessed with Customer Experience

Amazon is a prime example of a company that has built a global empire by obsessing over customer experience rather than fixating on competitors. They’ve made ease of transaction and customer experience their key differentiators, and this focus has driven them to become one of the most powerful consumer businesses in the world.

If you want to assess how seriously a company takes CX, look at how they invest in it. Most businesses allocate significant resources to marketing and customer acquisition, but very few invest in customer retention. It’s a well-known fact that it’s six times more expensive to acquire a new customer than it is to retain an existing one. Yet, many companies fail to invest in keeping their current customers happy, and even fewer measure this critical asset. For businesses looking to build a #1Reputation, this represents an enormous missed opportunity.

Securing Your Future Revenue

The priority for any organisation should be to direct its focus towards its existing customer base to secure future revenue. Many industries are under significant pressure, and those who aren’t relevant to their customers will quickly find themselves irrelevant. Once that happens, you’ll end up paying to win back the very customers you once had. To avoid this, businesses must build loyalty based on great customer experiences, not just convenience, exclusive supply, or price. Those who fail to do so will find themselves in a losing price war, while companies focused on service excellence will enjoy predictable revenue, higher margins, and stronger customer loyalty.

The Head and Heart of Customer Loyalty

Loyalty is driven primarily by customer experience, but not all experiences are created equal. There are head drivers—the tangible, hard factors like stock availability, logistics, efficiency, and price. Then there are heart drivers—the emotional, softer factors like helpfulness, friendliness, trust, communication, and understanding.

While head drivers are important, they’re much easier to replicate, and the loyalty they create is fragile. Heart drivers, on the other hand, form emotional connections with customers, fostering loyalty that is far more durable. Ideally, three of your top four loyalty drivers should be heart drivers to create a powerful emotional connection with your market.

At the end of the day, it’s not just about what you sell; it’s about how you make people feel. Businesses that understand this build a #1Reputation—one that is not only recognised but trusted and valued by their customers. And that’s a reputation worth protecting.

Darrell Hardidge is a strategy expert in building a #1Reputation and CEO of customer experience research company Saguity. Working with businesses on mastering customer appreciation and optimising service standards. He’s the author of The Client Revolution, the best seller The 10 Commandments of Client Appreciation, and soon to be released his new book #1Reputation.