Policy Works blog | Commercial lines bliss

The Customer Satisfaction Trap

Written by Steve Pieroway | Oct 23, 2014 2:20:07 PM

A recent study by Accenture reveals that, "upwards of 40% of otherwise 'satisfied' auto and home policyholders" were likely to switch insurers. Am I surprised? Not at all.

 

Satisfaction ≠ Loyalty

The idea that satisfaction does not lead to feelings of loyalty is actually old news. In fact, as far back as the early 1990's the relationship marketing literature was disputing this claim. The idea of satisfaction is fleeting. You can almost say that it has been commoditized. Feeling satisfed with a company is simply expected.

"Are you satisfied? Am I satisfied?" Sure. I guess. But what happens when a competitor offers a lower price, and claims to have 'high satisfaction' with customers? That's right. Ship. Jumped.

In 1994, researchers Morgan and Hunt published what is considered to be the seminal study in relationship marketing. It's title? The commitment-trust theory of relationship marketing. At its heart is the argument that trust and commitment are the drivers of loyalty. Not satisfaction.

Trust me

What is trust? Trust is defined as a “willingness to rely on an exchange partner in whom one has confidence.” It is a multi-faceted construct, comprised of 3 factors: ability, reliability, and benevolence.

You can get a more indepth description from one of our previous blog posts. The main takeaway is that trust isn't a singular idea - it's multi-facted. Trust is made up of ability, reliability and benevolence. Prove to a customer that you deliver on those three, and you build loyalty.

I do

Commitment, on the other hand, is simply the desire to maintain a relationship. Like trust, commitment is a multi-faceted construct that is part affective, normative and continuance (this one is negative, like how much of a pain in the derrière it is to switch banks). Unlike trust, commiment is driven by the customer. The more committed a person is to a company - the stronger their desire to continue a relationship - the more likely they'll be loyal.

Why would I know these things, you may ask? I wrote my masters thesis on the topic of trust, commitment and loyalty in relationship marketing. I also wrote an eBook titled, The Customer Satisfaction Trap: 9 Steps to Building Truly Loyal Customers. If you're a broker, there may be some interesting takeaways around building feelings of trust and commitment.

So forget that satisfaction stuff. Trust me (see how I snuck that in); you'll be better off for it.