The Ladder of Customer Loyalty

'Loyal Customer' is one of the key pillars for building a "Great Organization". Here the term 'Great' does not refer to 'financially sound' organization; instead a 'Great' organization delivers the 04 key results - (1) Sustained Superior Performance (2) Loyal Customers (3) Engaged Employees (4) Distinctive Contribution. [Ref: The 8th Habits: From Effectiveness to Greatness, Dr. Stephen R. Covey]

Now when we talk about 'Loyal Customer' we need to understand its meaning first. On our basic understanding, we call a customer 'Loyal', who buys frequently from us. But the meaning of 'Loyal Customer' has been evolved dramatically. We understand a customer is 'Loyal', when he/she not only buys from us regularly, but also recommends us to others (word-of-mouth); precisely 'the customer who creates customers'.

The New York Times Bestselling Author and No#01 Customer Service Guru, Ron Kaufman has illustrated the 'Ladder of Customer Loyalty' so beautifully on his bestselling book "UP! Your Service". The ladder looks like the following diagram:

Now let's look at the each step of the ladder:

The Ambassador: The die-hard 'Fans' of your product/service. The ambassador actively promotes you, writes recommendations about you in social spontaneously, he/she also passes your business card to others, even writes about you to papers! The truly desired level of loyalty for any brand. Like your business partner, an ambassador will tell you, "Let's invent together further".

The Advocate: They are the 'admirer' of your product/service. They mentions about you positively to friends & colleagues, writes recommendation letter or testimonials about you if asked and sincerely endorses you positively up on request. They tells you, "I insist to do my business with you!".

The Loyal Customers: The merely 'satisfied' customer, who comes back to you again & again to buy from you, is willing to pay a little more for your service, gives suggestions & feedback and may tell you, "I prefer continuing my business with you".

The Acquaintance: An acquaintance has heard about you, but holds no strong opinion about you. He/she may do business with you, if you give him/her a good offer; but he/she can easily switch to your competitors to avail something extra in their offer. As a 'prospect' he/she may tell you, "I am aware that you exist."

The Stranger: A stranger has not heard about you or is not aware about your existence. This person may tell you, "I am really unaware how your product/ service is different from others".

The Disappointed: This person is 'dissatisfied' with your product/service and unwilling to come back again. As a 'upset' customer, he/she may form opinion about you, "I don't trust you. I don't want to do business with you anymore".

The Angry Customers: An angry customer has 'bad' experience with you. Thus now he strongly rejects you. And, he/she says to you, "You owe me more than just the compensation".

The Terrorist: A terrorist customer has gone through your 'terrible' product/service and wants to damage your reputation now! This scornful customer tells you, "I want revenge! I'll discourage others to do anything positive with you!"

This 'Ladder of Customer Loyalty' helps companies and individuals to assess where their major clienteles stand now and thus, identify what are the action plans to move up in the ladder. It is also important to understand that anyone may have customers standing in the lowering stages (Disappointed/ Angry Customers/ Terrorists). But we need to certainly work on more closely to turn an 'angry' customers to 'loyal' customers. This is the 'winning' point, which creates the major differences with your competition (competitive edge); this is the true essence of a real 'Customer- centric' organization. 

Bill Gates has said it greatly:

Your most unhappy customers are your greatest source of learning.

[The article was published on LinkedIn on 12 September, 2018]