The difference between 'satisfaction' and 'loyalty'.

According to a recent study by Business Week magazine, 96 percent of bank customers will simply leave the bank without telling anyone. It is our silent killer. However, the surprise for many will be that 80 percent of those who left silently self-reported themselves as "satisfied" just prior to leaving. Here lies our major challenge and opportunity.

How do we discern a "satisfied customer" from a "loyal customer" and what is the impact on our attrition and therefore our bank?

According to a 2006 Maritz Market Research poll, most customers leave because of a poor experience with a staff member. Hmm. So the problems likely start with and end with "us." We need to identify our issues and subsequently our customers' issues.

Allegiance, a Utah-based loyalty firm, insists that an enterprisewide method of capturing customer feedback and then managing that customer feedback is the key to determining and assessing the difference between "satisfaction" and "loyalty." Let's step back for a moment and clarify satisfaction and loyalty. The best way I can relate satisfaction is "simply meeting expectations." For a bank, it is "Yes, I receive a statement; yes, the staff" seems friendly; and yes, my transaction was handled without error." Satisfaction is meeting our customers' need. Loyalty is the emotional bond that a customer has with you. Think of your Starbucks' cup and the feeling you have when you get that perfectly crafted--meeting my exact specification--cup of coffee. I can smell it right now!

For loyalty to be developed, we need to "engage" our customers and not simply interact with them. So what is engagement?

Allegiance considers engagement "the emotional bond or attachment that a customer develops during the repeated and ongoing interactions that they have as a satisfied and loyal customer." When customers are engaged with you, they are emotionally connected, passionate about your products and services, and aligned with the purpose and direction of your organization. That is when the magic happens: Customers have a financial need and in pop your bank's name as a first-choice solution. That is loyalty!

Wachovia Bank has focused heavily on customer engagement since its dark days in the late 1990s following several mergers and acquisitions. The bank has created a process of measuring the impact of engaged (loyal) customers. For Wachovia, an engaged customer (1) Looks to Wachovia first the next time they need financial services; (2) Increases the business they do with Wachovia; (3) Increases their share-of-wallet with Wachovia in terms of deposits and loans; (4) Increases the amount of deposits they have at Wachovia.

The key at Wachovia is engaging, not simply interacting with the customer. Gathering feedback, with quick application, and managing the information gained is instrumental in understanding and delivering your customers needs, wants, and exceeding their expectations. Having a process that measures closed accounts and sends a postcard with five questions 45 days after the account is closed is simply a waste of time. We need focused information, quick turnaround from an event (closed account, transaction or new account) to accurately and efficiently respond to the information gained. There is training, software, third-partner vendors, etc., that can help with this process. However, until we as an industry focus on engaging our customers and becoming more of a partner, attrition will continue to be an issue.

Bruce Clapp CFMP, is President of MarketMatch, a marketing communications firm in Clayton, Ohio, that works exclusively with community banks. E-Mail: [e-mail]