Strategic Planning ● Economic and Community Development ● Marketing Strategies

Customer Satisfaction is WORTHLESS: Customer Loyalty is Priceless Jeffrey Gitomer Bard Press, Austin, Texas, 1998, ISBN 1-885167-30-X

Subtitled "How to make customerslove you, keep them coming back, and tell everyone they know", Gitomer's book holds that traditional customer satisfaction measures are essentially meaningless. A merely satisfied customer, he maintains, is still likely to shop around the next time he or she needs to buy your product or service, for a better price or a more convenient offering. A loyal customer, on the other hand, is more likely to make a point of coming back to you specifically as the supplier, and moreover, is likely to recommend your product or service to others.

To illustrate this, he shows (on page 50) an interesting concept that he calls the "ladder of customer service":

The Customer is:	Tells?	Refers?	Buys Again?
loyal	tells everyone about you	refers proactively to everyone	always returns to buy
very satisfied	tells a few people about you	refers a few people	sometimes returns
satisfied	may tell someone, if asked	if asked, may refer	may buy, if convenient,
apathetic	tells no one	likely no one	maybe yes, probably not
unhappy	tells at least 10 people	for sure no one	after a few years maybe
did wrong	tells at least 25 people	absolutely no one	only by force
pissed	tells everyone who will listen	surely you jest	never... or when it snows in hell
lawsuit	tells the whole city (reverse referral)	anyone BUT you	not even if it helps the space program

So the key is how to develop loyal customers, not simply satisfied ones.

Gitomer holds that it all boils down to something easy to say, but harder to do in practice: GIVING GREAT CUSTOMER SERVICE. To show what this means in practice, he has articulated 13 principles of customer service success, which are:

1. understand that your customer is your paycheck - (an interesting suggestion that Gitomer has here is to paste a picture of your children eating dinner above your desk or workstation, to reinforce the knowledge that your customers are the source of your bread and butter).
2. know that your attitude (which he conceptualizes as the way you dedicate yourself to the way you think) determines the degree of excellence of the service you perform
3. customers call, contact, or visit for one reason ­ they need help! - Gitomer advocates being as helpful and speedy in your response as possible to customers when they call, rather then letting then linger in voice mail limbo, or be left uncertain as to whether you can help them or not ­ as he says" give them help, not hell"
4. the value of a customer is 20 times his annual sales volume - Gitomer recommends thinking in relationship marketing terms ­ about the lifetime value of a customer
5. a customer ready to repeat his purchase is a powerful business advantage - the point here is that a major strategic business advantage that you have over your competition is customers who want to buy from you again and again - retaining these loyal customers (and developing more, of course) should be a key business strategy
6. customer satisfaction is worthless: "Satisfaction is no longer the acceptable standard of customer service. Satisfaction is no longer the acceptable measure of customer service success. The standard and measure of success for the next millennium is loyal customers." (p. 79)
7. when you're done speaking with a customer, or when the transaction is over, that's when they start talking - Gitomer recognizes that word of mouth is the most powerful form of advertising, and that customers who say good - or bad - things about you are extremely influential
8. word of mouth advertising is 50 times more powerful than advertising
9. your friendliness and willingness to help is in direct proportion to your success
10. company policy is written in terms of the company, not the customer - Gitomer's point here is that whenever a customer request cannot be dealt with, it is very bad form to fall back on 'company policy' as the reason why - company policy is written for the benefit of the company, not the customer - the customer doesn't care a whit about what the policy might be, they only know that they are dissatisfied because they can't get what they want - when absolutely necessary, he recommends using phrases such as "in order to be fair to everyone" which at least puts the emphasis on the benefits to customers, not the company
11. service is a feeling ­ "Service is a feeling, and you know what it is ­ whether it's good or bad. If you can't remember what 'bad' feels like, call the DMV, Post Office, IRS or Social Security. That's bad. Then call L.L.Bean ­ that's good." (p. 84)
12. the secret to successful customer service is start with... YES - Gitomer says that instead of saying 'no' to customers, say 'yes' whenever possible, even if it is something along the lines of "yes, I see your concern"
13. the customer's perception of good or bad service is the measure of your success or failure

Most of the book is given over to an elaboration of these principles. A 'golden rule' that Gitomer suggests to help clarify these is to pretend that the customer is your grandmother, and to treat them with the respect and eagerness-to-please that you would your real relative.

According to Gitomer, great service is anything extra that you can do for your customer that will make them take notice of you and say WOW! He presents many examples of this kind of service in the book (such as the hotel that calls ahead of your visit to see if there is anything they can have prepared for you upon your arrival, or the tire store that has someone greet you in the parking lot with an umbrella when its raining).

WOW! Service will in turn generate free word-of-mouth advertising (because people like to tell memorable stories) that will in turn help build your business. Plus the customers will be not merely satisfied when the next opportunity rolls around for them to purchase your particular good or service - they will be loyal.

The most important determinant of providing WOW! Service is attitude and self-motivation, and Gitomer talks throughout the book about how to improve one's knowledge and positive attitude about the business they are in.

Customer Satisfaction is WORTHLESS: Customer Loyalty is Priceless is a quick and easy read, with lots of interesting examples and points to ponder. (For example, he provides a useful checklist of things to do when customers call up to complain - and you can be sure that one of then is NOT saying "Sorry - it's company policy"). Gitomer's style is very open and user-friendly, with interesting variations in the typeface to enhance reader interest and curiosity. Throughout, he presents quizzes and self-evaluation questionnaires to help the reader evaluate their own levels of service.

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