Customer Loyalty – the mantra for sustainable competitive advantage

 “…it will not suffice to have customers that are merely satisfied. Satisfied customers switch, for no good reason, just to  try something else. Why not? Profit and growth come from customers that can boast about your product or service – the loyal customer. He requires no advertising or other persuasion, and he brings a friend along with him.”

W. Edwards Deming

Acquiring good customers, earning their loyalty, and retaining them for the long haul has been declared the only mantra to develop sustainable competitive advantage. The challenge is magnified when you understand the market landscape – where technology ensures that your competitors (and you!) can duplicate any and every new development in a jiffy.

For those that need further convincing, here are some startling statistics:

• Only 4% of customers with problems actually complain
• On an average, a customer with a problem tells at least 9 others about it
• On the other hand, a customer with a good experience shares it with 5 others
• While it is difficult to get people talking about their good experience, satisfied customers are worth cultivating as it costs 5-7 times more to acquire a new customer than retain one
• Sample some more statistics to shake you out of complacency – 50% of dissatisfied customers walk away taking their business to a competitor.

A satisfied customer is worth retaining because over a period of time, he buys more at a higher price as he is less likely to get  swayed by competitors’ price offs and even less likely to ask you for one. What’s more, he will refer your product or service to others.