Customer Service
Creating Customer Loyalty: The Customer Loyalty Grid
By Brian Ward
Feb 11, 2007 - 3:53:48 PM

What makes a loyal customer? One who speaks loudly and with fervor about your organization, telling others how you have made a real and positive difference in their lives? In a word... expectations. 

But meeting or exceeding customer expectations is not as simple as it first appears. For a start, many of your customers or prospective customers are not sure what they should expect, and many will not tell you because they expect you to know...after all, you're the expert at what YOU do, and you can't expect the customer to know as much about that as you. 

In our work, we like to break this problem down into pieces, and for that purpose we use what we call The Customer Loyalty Grid™ to help us understand this better. This grid is divided into four zones, as depicted in the diagram below: 

 

Customer Loyalty Grid(tm)

Zone 1: Unstated/Expected...The Zone of Indifference

Literally, this includes all those customer needs and wants that are basic to fulfilling the contract between you and them. For example, customers expect to be treated with courtesy and respect, and would probably be puzzled (and maybe even insulted) if you asked them if this was a need. It of course is, and if you don't meet this need, you will cause DISSATISFACTION. If you meet this basic and obvious need, the best you can hope for is INDIFFERENCE.

Zone 2: Stated/Expected...The Zone of Satisfaction

This is where your customer actually TELLS you what is important to them. Listen carefully here, as this is a key stepping stone to customer loyalty. Meeting a customer's needs here will cause SATISFACTION, whereas not meeting them will cause DISSATISFACTION. For example, a customer might expect a volume discount on a purchase, but knows that they have to specifically ask (or negotiate) for it. It is an expectation, simply because other organizations that the customer deals with provide this benefit.

Zone 3: Stated/Unexpected...The Zone of Delight

This is where your customer HOPES for something, ASKS for it, but really does not expect you to provide it. This is your opportunity to provide something beyond their expectations and by so doing will create DELIGHT. For example, a customer might ask for something that is usually available only in a premium priced product. Not providing it will unlikely cause dissatisfaction. Therefore this is an area for particular attention in building a LOYAL customer base.

Zone 4: Unstated/Unexpected...The Zone of Loyalty

This is an area where your expertise in whatever product or service you provide and the customer's lack of expertise can really pay off! Providing benefits above and beyond what the customer is even aware of can create a LOYAL customer. This requires you to be really proactive in suggesting to customers new innovations that they can really benefit from. Many customers will be even willing to pay extra for this. For example, airbags in automobiles when first introduced were an innovation that saved lives, but customers had no way of asking for this innovation, or expecting it, before it became known to them.  

All Zones are equally important

To get to the Zone of Loyalty, you must first conquer the other zones...there are no short-cuts. If your organization is really good at innovations (the key factor in creating Loyalty), but struggles at reliability (the key factor in creating Satisfaction), then it will end up struggling in all four zones. 

Loyalty creating innovations are time limited

What was once an unstated/unexpected innovation will eventually become unstated/expected...would you now purchase a car without a CD player? Would you even ask the salesperson if it is installed? So maintaining a rate of innovation that matches or exceeds what the market demands is crucial to maintaining customer loyalty.

The Grid in practice
You may be working on a project team that is charged with the goal of achieving breakthroughs in program, product or service design. So how would you use the grid in such a situation? What design process would you use?

What to look for

There was a time when there was a clear delineation between product based organizations and service organizations. Not any more. Manufacturing organizations know that they can gain an edge by providing superior service, and service organizations know that their 'product' is a human performance, and that they need to excel at it. Each knows that 'performance excellence' is achieved by design and not by default. 

In any attempt to design or redesign a product/service, in exploring each of the zones, it is useful to have some framework, some standardized way to categorize performance dimensions. The following dimensions have been adapted from the work of Parasuraman et al, in their work on the ServQual model, conveniently remembered by the acronym 'RATER':

R eliability
Keeping your promise, doing what you said you will do. Doing things right the first time.

A ssurance
Making the customer feel safe in their dealings with you, being thoroughly professional and ethical.

T angibles
How the product/service looks to the client, the appearance of personnel and equipment, etc.

E mpathy
The degree to which the organization and service personnel understand the individual client and their needs, the ability to adapt the service to each client, the willingness to 'go the extra' for the client.

R esponsiveness
The availability, accessibility and timeliness of the service. The ability to respond to enquiries and complaints in a timely fashion.

Each of these dimensions needs to be explored for each of the zones, producing a matrix that captures both the Voice of the Customer (VOC) as well as the Voice of the Expert (VOE):

Conclusion

All parts of your organization are involved in creating loyal customers...those who produce and deliver your products or services, reliably day in and day out, as well as those who create and bring to market new offerings that delight the customer. Treat them all as members of the same team...the Customer Loyalty Team...and you will reap the benefits well into the future.