Customer satisfaction has certainly been a topic of discussion for business leaders for a long time. J.D. Powers has built a reputation on the measure and most health care organizations are eager to display the high levels of reported satisfaction among plan participants. Within the past few years, however, attention has turned to measures of customer loyalty. What’s the difference? Should you bother measuring both? This posting provides answers to these questions.

First of all, satisfaction and loyalty are not simply two different words used to describe the connection between your company and your customer. Generally, satisfaction is a rational response to the product or service you are providing. It is a customer’s evaluation of how well the product or service met their need, whether that need is physical or emotional, tangible or intangible. The level of satisfaction can fluctuate within a short period of time depending on the current needs of the customer and their mental state.

Loyalty, on the other hand, tends to be a more emotional connection to your company. It takes longer to form and, as a result, is usually harder to break. Loyalty can be described as a connection to the mission or purpose of the company and elicit statements like, “I really believe in Blick Corporation’s support of inner-city education.” Loyalty can also be described as a willingness to be an advocate for the company or product: “I would recommend the Q Car to all of my friends because of its environmental-friendly combustion system.”

Why the shift in focus to loyalty? One key phenomena that led to the study of loyalty was the fact that satisfied people sometimes shopped elsewhere. Despite high levels of satisfaction, customers did not have a strong enough bond to the company and purchased from a competitor. Thus, knowing satisfaction levels is not enough to maintain a stable customer base.

Continued study revealed that companies with more loyal customer bases were more profitable. In essence, these companies capitalized on the lower acquisition costs associated with retaining a larger proportion of their client base. While this might lead you to strive for 100% loyalty among your customers, bear in mind that some loyal customers could be less profitable, such as the ones who take up a lot of your sales staff’s time but make only small purchases, and then subsequently return that purchase.

So, where does that leave you and your customer measurement program? Well, if you have no program in place, and are considering implementing one, it makes sense to start in increments and first determine the level of satisfaction of your existing customers. Information from this research could potentially drive strategic planning for several years to improve your customer connections.

If you find you are comfortable with your current satisfaction measures, and are ready to kick it up a notch, then measuring loyalty, and key drivers of loyalty, provides a whole new perspective to understanding the relationship between your company and your customers. It provides another way of segmenting your customers so that you can better serve your strongest clients and form strategies for making them advocates for your business.