“What causes customer loyalty?” I recently met a former Panasonic customer service manager and he posed that question to me. I foolishly suggested that customers are loyal to quality products and services so long as they stay within that customer’s acceptable price range (as if I know what the heck I’m talking about). The man was kind toward my ignorance and told me a story to point me towards the truth rather than simply tell me that I’m wrong. He said that in the electronics market, there are many competitors producing and selling the same products with little differentiation between the quality and features among the variety of brands. So they generally had to compete on price to attract customers. The basic idea is that if my company can sell a quality item to a given consumer even if it sells for a loss, then that consumer will come back to my brand again in the future. It’s a brilliant idea except for the fact that it doesn’t work.

With the issue of poor customer retention facing Panasonic, my friend decided to obtain customer information using a survey. He was surprised to find out that although most customers were satisfied with the Panasonic products they had purchased; only about 10% of them would have definitely purchased a Panasonic product the next time they would be in the market for electronics. Worse still, less than 5% would recommend Panasonic to friends and family. But why?

My friend decided to focus his questions on the loyal customers to find out what the company was doing right to win them. They all indicated that they would purchase Panasonic again because they received more than they expected with their first purchase. Possibly their expectations were low to begin with, and there is a chance that many of them didn’t know what they were buying in the first place.

When he searched deeper though, my friend found that all of the very loyal customers had a positive emotional experience during the purchase or initial use of the product. It was that emotional experience more than anything else that hooked those customers to the brand.

I think the lesson in this story is clear: STOP SATISFYING YOUR CUSTOMERS!

But maybe the real question in this week’s blog is this: How can we create those emotional experiences with our customers? I look forward to reading your answers.