The impact of products and services on customer loyalty
There are many tricks for a company to get their customers to come back, but the two most important driving forces to get truly loyal customers are to offer high value to the customers and to have a good relationship with the customers. These two driving forces can in turn be divided into several other factors.
The very basis for offering value is that it is the customer who decide what it is that is worth something. Value is often a tradeoff between price, quality, and other factors, such as different product characteristics.
A problem with developing a product or service that customers value is that it is often difficult to know exactly what customers perceive as a value in advance. Henry Ford once said about developing cars that “if I had asked people what they wanted; they would have said faster horses”. It is often the case that innovative products do not emerge by companies asking people what they want.
Think of products like smartphones, tablet computers, and social media. Had a company 15 years ago tried to ask people about their needs for these products and services, they would probably have realized that the need didn’t exist. Since almost no human could imagine the use of these products and services, people could not feel a need for them either.
This means that is difficult to develop new functions in products or services that customers really value. Product managers being surveyed claim that just under a third of all functions in technical products are never used by any customer at all. Think about that for a second, ONE THIRD of the functionality IS NEVER USED AT ALL. This means that a large share of the companies’ development budgets is spent on developing things that no one will ever use.
If you think about yourself, do you use all the features of your phone, your TV, your stereo set, or your computer?
An advantage with innovative products or services is, of course, that they offer a unique value, that products and services available from other companies do not. This means that innovative products and services can contribute to loyal customers since the customers get access to unique products.
Even if you don’t work with innovative products or services as mentioned above, you can still offer innovative (unique) features in your products or services that can contribute to customer loyalty.
The problem with developing innovative products is, as I have already stated, that it is not possible to ask people directly what they want. In order to produce attractive offers, it is instead important to understand the customers, without asking them exactly what they want, and then use product/service experts internally in the company to develop attractive products or services. One company that has been phenomenally successful working this way is Apple.
The value to customers is also dynamic, that is it changes as time goes by. There are always new companies and products that challenge existing products. There are many examples of large, previously successful, companies that have been hit hard by a changing world. In order to have long-term loyal customers, it is therefore necessary for companies to monitor their surroundings and adapt continuously. To not miss important information, it can be an advantage to use a structured model to analyze and understand the surroundings.