The Challenger Sale

Figure 4.1.
Representative Drivers of Customer Loyalty

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The first thing you find when you look at the analysis is a definitive
impact on loyalty from brand, product, and service. When you combine
these factors you find that 38 percent of customer loyalty is attributable to
your ability to outperform the competition in these areas. Selling a well-
branded, highly differentiated product, supported by higher-than-industry-
average service will undoubtedly get you more loyalty. If you’re way
behind the competition in any of these three categories, that’s probably
where you want to start.
That said, many executives look at these results with genuine surprise.
They expect these factors to account for much more, maybe 70, 80, or even
90 percent of customer loyalty. After all, if they can’t win loyalty off their
superior brand, product, and service, well then, what else is there?
But the reason for their surprisingly low impact stems largely from a
common trend captured perfectly in a story told to us recently by the global
head of marketing at one of the world’s top financial services firms. When
she saw this data, she said, “Four years ago, our company was sitting at
only 65 percent customer satisfaction due to a long trend of generally poor
customer service across our entire industry. Seeing this problem as a real
growth opportunity, across the next three years we set about analyzing and
improving service across every major customer touchpoint, investing
millions of dollars and countless hours along the way. And the results were
phenomenal! At the end of three years, we had increased customer
satisfaction from 
65
percent to 
95
percent.” Sounds fantastic, doesn’t it?
“But,” she continued, “there was only one problem. In those same three
years, our two biggest competitors did the exact same thing. They invested
roughly the same amount of money and achieved more or less the exact
same result. So here we are, four years later, and our entire industry sits at
96 percent customer satisfaction. Don’t get me wrong, that’s great, but as a
result we’ve seen absolutely no commercial benefit from all that expense.
Satisfied customers leave us every day, because they know they’ll be treated
equally well somewhere else.”
Now, is it fair to say that this company had to invest that kind of time
and money simply to stay in the game? Absolutely. Had they not, they’d
just as likely be out of business today. But the lesson is still maddeningly
familiar. We pour millions of dollars into brand, product, and service

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seeking growth, and really only get status quo. Our customers are more
satisfied, but they’re not necessarily any more loyal.
So what’s happening here? To find out, we went out and discussed these
findings with some of the customers who had completed the survey and
heard something that might surprise you. In light of the results—the
relatively low impact on loyalty of brand, product, and service—we
expected at least 
some
of these customers to express real dissatisfaction
with the supplier in questions across these three categories. But that’s not
what we heard at all. In fact, it was just the opposite. They 
loved
the
product! The brand was 
world-class
! The service was 
fantastic
! But if that
was the case, then why in the world were the loyalty scores for these
attributes so low?
The answer lay in what these customers would often say next. “Sure!
They’ve got a 
great
product! It performs exactly like they said it would!
But the competition’s got a great product too!” Or, “Their brand is