Loyalty goes to the best relative deal
A customer stays with a firm when they believe it gives them more value than the alternatives would. Loyalty is a comparison against competitors, not an absolute feeling about one company.
Business
Soft measures predict hard results
Measurable things like employee satisfaction, customer satisfaction, and service speed and accuracy are leading indicators of later financial results. For example, units rated highest by customers outperformed the rest on every measure, and offices that worked fast and accurately earned more.
Profit flows from loyalty, not satisfaction
In service businesses, the strongest link to profit is customer loyalty rather than satisfaction alone. Satisfaction matters because it leads to loyalty, and loyalty is what produces growth and earnings.
Happy staff make happy customers
Employee satisfaction and customer satisfaction track each other closely, and employee loyalty tracks customer loyalty. In businesses where frontline workers deliver the service, how the staff feel about the job shows up in how customers feel about the company.
The satisfaction mirror runs both ways
Satisfied customers make employees more satisfied, and satisfied employees make customers more satisfied. The two reinforce each other, so gains or losses on either side tend to spiral.
Value is results against expectations, over price
A customer judges value by comparing the service quality they get with the quality they expected, and weighing both against what they paid. Beating expectations at a fair price earns loyalty, while merely meeting them may not.
Deeper relationships are more profitable
Loyalty can be measured by how many different services a customer buys from the same firm, and this depth tracks profitability. So it can pay to encourage existing customers to use more of what you offer, rather than only chasing new ones.
Each link exchanges value with the next
The business forms a chain in which employees, customers, and owners each give and receive value from the link beside them. Weakness at any one link passes along the chain and eventually reaches profit.